Financing 101 in Gonzales, LA

Financing 101

If you’re trying to decide which auto financing agreement you need, then our team at Ascension Honda can help you do just that. We understand that purchasing a vehicle can be stressful, which is why we have put together a guide for understanding the auto financing world. So, before you sign that dotted line, check out these auto financing tips.

What Is Auto Financing and How Does It Work?

Purchasing a vehicle is a big financial commitment, which is why many people choose to find an auto financing agreement that meets their needs. Auto financing is simply when you borrow money from a lender, bank, or credit union. You’ll set up a loan term in which you’ll agree to pay the money back with interest. The loan terms, interest rates, and conditions are the core elements of an auto loan.

• Loan Term: How long the buyer has to repay the borrowed money. Loan terms typically last 36 months (three years), 48 months (four years), or 60 months (five years).
• Interest Rates: The costs of borrowing money are usually displayed as a percentage.
• Conditions: Rules set by the lender and agreed upon by the borrower must be followed, or penalties will be enforced.

Types of Auto Financing

The most common types of auto financing:

• First-Car Car Buyers: This loan is great for first-time car buyers because it has benefits like waived application fees and lower interest rates; you may even receive lower down payments.
• Secure Auto Loans: This loan uses collateral, such as your vehicle, so if you miss a payment or default on a loan, the lender can repossess your vehicle.
• Auto Refinance: This loan is when you replace your current loan with a new one. Car owners typically do this when their credit score improves and can help pay off their current loan.
• Unsecured Auto Loans: Your credit score determines which rates you are eligible for. This loan is commonly used when the buyer has a lower credit score.
• Lease Financing: Think of it like you’re renting a vehicle. You agree to a lease term, and once your lease ends, you’ll have to decide to buy the vehicle, return it, or start a new lease agreement. You do not own a leased vehicle.

Factors that Affect Auto Loan Rates

Your auto loan can be impacted by factors like:

• Loan Term: When you have a longer term, your interest rates are typically higher, so if you agree to a shorter term, your interest rates will be lower. Shorter terms also mean higher monthly payments; however, you’ll pay the loan off sooner and save money compared to longer terms.
• Age of the Vehicle: Newer vehicles have a lower risk, so rates are typically lower than if the vehicle was older.
• Credit Score: If you have a higher credit score, you’ll have lower interest rates.
• Down Payment: The amount of money you put toward your down payment can also affect your interest rates.

How To Compare Auto Loan Rates

When you’re trying to find an auto loan, reach out to several lenders and compare interest rates and terms so you can choose the one that best suits your needs. You should also remember to check out the annual percentage rate (APR), which includes interest rates and other loan costs.

How To Determine Your Monthly Budget

It’s recommended to spend no more than 15% of your monthly income on transportation, car payments, and insurance.

To determine what you can afford, you’ll need to first determine what your monthly net income is, which is how much money you take home after health insurance and taxes. Then you’ll create a short list of vehicles you may be interested in and figure out what car insurance and fuel would cost. Finally, you’ll subtract that number from your monthly income, which will be what your monthly car note will be.

You can reach out to your preferred insurance company to receive a quote on insurance.

How to calculate estimate fuel expenses

1. Take the average distance you commute and multiply it by the average number of days a month (30).
2. Divide that number by the mileage of your chosen vehicle.
3. Multiply that number but the current price per gallon and consider adding an extra dollar to the price per gallon so you can account for fluctuations.

How to Apply For Financing at Ascension Honda

At Ascension Honda, our team will work with you to find an auto loan you can feel confident about. We also offer a simple and secure online application that you can fill out from the comfort of your home. You’ll need to submit information like employment and income, and once submitted, our team will reach out to you with finance options. Stop by our dealership located at 13325 South Airline Highway, Gonzales, LA, 70737, to learn more about auto financing.