How to shop for your auto loan

Are you in the process of buying a new or pre-owned vehicle? Do you intend to pay cash for your next vehicle or would you like to finance it? If you answered that you prefer to finance, you may have some questions regarding the process of getting an auto loan and how the whole thing works. The following small guide will give you a bit of information on the financing process and how you can go about shopping for your auto loan.

The first thing that we should mention however is that auto loans have changed quite a bit in the last few years. It is a lot easier to know what kind of loan you are getting, the details about the loan and knowing just exactly how this loan will impact your budget. If your are dealing with a dealership that is not forthcoming about this information, you should probably not get your loan from them. At Morrey Nissan Burnaby, we pride ourselves on being honest and transparent in all of our transactions and our clients always know what is going on. With that in mind, let's take a closer look at how you can go about getting the best auto loan possible.

Interest rate and terms

There are two components to an auto loan, the interest rate and the term. The interest rate is what is added on to the value of the car because you are taking a loan and the term is the length of time that you will be paying off the loan. We sometimes see 0% financing on vehicles, but the truth of the matter is that 0% financing usually doesn't involve a rebate on the car while if you do take a rebate and you pay cash, you don't get 0% financing. Ultimately the cost of the financing in this case, the interest rate if you will, is the value of the rebate.

So, what you want to make sure is that when you are comparing interest rates, you are comparing apples to apples. You also want to look at the term because most of the time, shorter terms will have better interest rates. So, if you finance on 24 months, you should get a better interest rate than if you finance on 72 months. However, the term plays an important role because if you're financing on 24 months, your monthly payments are still going to be very high. You can lower the value of your monthly payments by extending the term and sometimes you will want to do that if there is no interest rate penalty, and you want to make sure the vehicle fits within your budget.

Some experts will tell you that you do not want to extend the term to make sure the vehicle fits your budget. This could be true if you're talking about buying a vehicle that you don't need, but if there's a vehicle that you need and you just need to make sure that it doesn't cost you too much per month, and there's no interest rate penalty by extending the term. Yes you will be paying a little bit more in interest but at least you'll be able to comfortably afford the vehicle every month.

Your credit score has an impact

Your credit score will have a direct impact on the interest rate that you receive. If you have a poor credit, you can expect to pay more in interest because the banks see your loan as having more risk. The good news is that if you pay off your loan in a timely manner and your credit improves, your interest rate will also improve. It's also important to mention that you can get a better deal by working with dealerships that have great relationships with their lending institutions like Morrey Nissan Burnaby.

Service is important

When you are shopping for an auto loan, service is the most important thing. We touched on this earlier, but you want to do business with a dealership that understands your needs and it has your best interest at heart. It can be difficult to shop for an auto loan with poor credit so you want to make sure that you don't allow yourself to receive poor service just because you don't feel like you should get a good loan. You deserve the highest level of service regardless of your credit. That's what you will receive at Morrey Nissan Burnaby.