Financing 101 in Bradenton, FL

Auto Financing at Hendrick Honda Bradenton

When you want to buy a vehicle, financing your purchase with an auto loan can be straightforward and rewarding. It just takes familiarizing yourself with each step of the process. We're here to walk with you through every step of your car-shopping experience at Hendrick Honda Bradenton, so let's take a closer look at the ins and outs of auto financing.

What Is Auto Financing and How Does It Work?

To finance a vehicle purchase, you borrow money from a lender, which is usually a credit union or bank. As part of the deal, you agree to pay back that money over a set time period, and in addition to the amount you borrowed, you'll need to pay interest on that loan. The majority of new car purchases are financed with auto loans, as most car shoppers would rather make payments over time instead of paying the full price of the vehicle up-front.

To understand the ins and outs of financing, get to know these basic terms:

Interest Rate: This is the price charged by the lender for borrowing their money. They determine this amount as a percentage of the total amount borrowed.

Loan Term: This is how long you have to repay your auto loan. Loan terms are usually set for 36, 48, or 60 months.

Conditions: Your lender might add conditions to your auto loan, including penalties for late payments or rules about paying off the loan early.

Types of Auto Financing

Not all auto loans are the same, and there are several different financing plans available to suit specific situations:

• Secured Auto Loans:A secured loan is backed by collateral - in this case, the vehicle you're buying. That means that the lender can repossess the vehicle if you default on the auto loan payments. This loan type usually requires a down payment and often offers a lower interest rate than some other auto loans.
• Unsecured Auto Loans:There is no collateral for this loan, and your eligibility depends on the condition of your credit score. An unsecured loan may have a higher interest rate than a secured auto loan, but it can serve as a valuable pathway to car ownership if you're concerned about a down payment.
• Auto Refinance: In some situations, car owners find it useful to take out a new loan to pay off the original auto loan. If you've improved your credit score since you started the first loan, or if you're interested in a lower interest rate, you might benefit from auto refinancing.
• First-Time Car Buyer Loans: If this is your first vehicle purchase, you might be eligible for a first-time car buyer loan, which features perks like a lower down payment or waived application fees.

Factors that Affect Auto Loan Rates

The auto loan rate you're eligible for is determined by multiple factors:

Credit Score: A higher credit score can entail lower interest rates, and lenders may look into the details as well, including your debt-to-income ratio.

Loan Term: A short lease term can entail higher monthly payments with lower interest rates. That's because there's less time to repay the amount borrowed. Even though the monthly auto loan payments are higher, because the interest rate is lower, you actually pay less money overall than you would with a longer term with higher interest.

Down Payment: Making a larger down payment can lead to a lower interest rate since there would then be less money to repay. To inject more cash into your down payment, you can use the trade-in value of your existing vehicle, so try out our Value Your Trade form to see what a trade-in can do for you.

Vehicle Age:Because newer vehicles are thought to be less likely to break down, they can come at lower rates than used models. New vehicles might also be available with manufacturer or dealership promotional rates that wouldn't be available with pre-owned vehicles.

How To Determine Your Monthly Budget

Planning a budget will allow you to shop within your means and avoid taking on automotive expenses that you wouldn't be comfortable with. Conventional wisdom holds that your transportation expenses - auto loan payments, gas, maintenance, and car insurance - should stay within 15 percent of your monthly income. To see what your car insurance rate could be, request a quote from your insurance company.

How to Get Pre-Approved for an Auto Loan

When you're pre-approved for an auto loan, you'll have a better idea of how much car you can afford. To get pre-approved, you'll need to share some essential info about your income, employment, and credit so that potential lenders can determine how much money they can lend you for your auto loan. Once that amount is determined, you'll receive a quote with the interest rate you could expect. With that info in mind, you can search for the vehicle that meets your needs and works with your budget. We're standing by to help you find the auto loan you need, so get started today by applying for financing with our secure application.

Visit Us at Hendrick Honda Bradenton

When you're ready to take the first step toward buying your next car, call or come see us at Hendrick Honda Bradenton. We'll help you take every step with confidence, and you can count on us for a clear and rewarding finance experience. We look forward to seeing you soon at 5515 14th Street W, Bradenton, Florida 34207.