How to Finance a Car: A Step-By-Step Guide（1）
Here are seven steps you can take to finance a new or used car:
A good used car is at the higher price that someone can comfortably pay in cash, which leads to the need for used car financing to make the car affordable. There are a few things to keep in mind when looking for a used car loan, which will make the process easier and lead to better long-term loans. In the rush to sign on a used car paperwork, something like the interest rate doesn't seem to matter, but it can mean saving a lot of money or dramatically increasing costs over the life of the car, allowing you to find the right loan in the first place.
1. Learn the language of the loan.
Auto Loans: A car loan is a contract between you and a lender that agrees to offer you money to buy a new or used car, and you agree to pay it back over time. Unless you get a zero-rate financing contract, you must pay interest on your loan balance each month. This interest rate will be specified in the loan document. Some lenders will also charge you a loan fee.
Interest: Interest is the cost of borrowing from a lender. It is expressed in the form of interest rates (usually called annual percentage or RPA). Interest includes the cost, risk and cost of the lender and provides profit margins.
In general, interest is calculated daily on the basis of the remaining repayments. For example, if you add a $10,000 limit to your interest rate, the interest will be calculated as follows:
Assuming the loan amount is $10,000, the interest is as follows:
Day 1 - 10,000 X ( 6 / 365 ) - $1.64.
Day 30 - 1.64 x 30s $49.31.
Suppose the monthly repayment is $500, and the money will repay the outstanding interest, and the rest will reduce the amount of the loan. In our case: $500 - $49.31 - $450.69 will be deducted from the borrowed capital, while $49.31 is used to pay interest.
Life of the car loan: the duration of the loan is the duration of the car loan, the duration of the car consumer loan is usually 1-3 years, the maximum is no more than 5 years.
Repayment methods can choose the method of serviising the single debt and the method of restitution of payments (main equivalent, principal equivalent).
Main: The main amount of the loan is the loan balance. When you arrive with the funds, that will be the total amount of the loan. When you pay on a monthly basis, the principal drops. For each payment, one part will be paid and the rest will be paid the principal.
Down payment: Consumers who have the desire to buy a car from car finance companies or bank loans to buy a car, After approval of the loan application, the consumer in accordance with the relevant requirements of the bank car down payment loan (usually the minimum car down payment required by the general bank is 20% of the car payment), in the purchase of the entire vehicle in a timely manner, the total amount of the purchase of the car is not paid on time, a certain amount paid to the bank or car finance company.
Monthly payments (or car payments): Each month, you will be asked to pay the principal and interest on the loan. Monthly payments will be equal and will have a specific due date.
Bank loans are commonly used in two types of repayment methods: the same amount of repayment of principal and interest and the same amount of principal repayment.
