Quick Guide and Tips to Auto Financing in Kingsport

Buying

Buying and leasing are two financing options for very different needs. With a loan, you finance the entire cost of the car. You then pay off the loan, which can have a term period of up to seven years. The interest rate will depend on the length of the loan, whether you buy a new or used vehicle, and your credit rating. One of the benefits of buying over leasing is the equity that you have in the car once you pay it off. You can use this as a down payment on a new vehicle when you’re ready to upgrade.

Leasing

Leasing is another option. Keep in mind that this is better for drivers who don’t plan on keeping the same car for a long time and for those who don’t drive a lot of miles each year. Most leases last for just two years, and since you will not own the car at the end, you don’t get the benefit of a trade-in value. Payments for a lease are usually lower than a loan, but you need to stay within a certain number of miles. If you go over this limit, you have to pay a fee based on the total mileage.

The Term of a Car Loan

The term of a loan refers to the amount of time it will take you to pay the lender. It is important to remember that although a longer term often means lower monthly payments, in the end, you will pay more for the car because you are paying many months of interest. You might even owe more than the car is worth if you spread the payments out for too long. If you can handle a slightly higher payment, shortening the length of the loan is a better way to go.

Credit Scores

No matter what type of financing you choose, your credit score has a significant impact on the interest rate you will pay. Your credit score comes from several different credit bureaus who assign a number based on several factors, including the amount of debt you have, how many open accounts you have, and if you pay your bills on time. When you apply for a loan, the lender will look at your credit score and the information on your report to determine the interest rate that they will charge.

These are a few of the factors to consider when deciding how to finance a vehicle. Each situation is different, so continue to research so you can go in with all the necessary information.

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