How Auto Loans Work In Alcoa TN
Many potential vehicle purchasers, especially those considering this type of investment for the first time, are unaware of how the loan process actually works. The make and model of the vehicle you are interested in buying, whether it is new or used, your credit history, your down payment and trade in and where your loan comes from all play a role in your vehicle loan and future payments.
A number of dealerships offer in house financing whereas others utilize outside lending through credit unions and banks, such as Citizens Bank of Blount County; some offer both. If the dealership’s in house finance department can not provide you with Auto Loans Alcoa TN, they will search their outside connections until they find a lender who is able to finance your vehicle.
Interest rates from lending institutions are usually lower than those for Auto Loans Alcoa TN through the dealership itself. If you find yourself in need of second chance financing, though, acquiring a vehicle through a “buy here, pay here” type of dealership may be your best option, regardless of the interest rates.
In most cases, a used vehicle generates a higher interest rate than a new vehicle. The dealership will run a credit check to obtain a report of your financial history. If you have a low credit score due to financial mishaps in your past, your interest rate will be higher than that of someone who has a spotless credit record.
Dealerships generally require a minimum down payment, based on the price of the vehicle in question. If you can afford to do so, providing more than the minimum down payment will lower the financed amount of your purchase. Depending on the dealership, the value of your trade in may be either considered part of your down payment or be deducted from the financed portion of your vehicle.
The length of your financing will also affect your interest rates. If you opt for five year financing, your monthly payments may be lower but you will pay more interest in the long run. Two or three year financing will yield much higher monthly payments; however, you will end up paying less interest.