Auto Financing 101 in Kansas City, MO

Auto Financing 101

If you’re preparing to buy a vehicle in Kansas City, Missouri, you’re bound to discover the model you need here at Reiselman Nissan. Here on our lot, we aim to do much more connect you with the vehicle that’s right for you – our team is ready to help you get the financing you need to drive home with peace of mind. Getting an auto loan is easy and stress-free when you rely on our staff, so let’s go over the ins and outs of the financing process to let you make all your car-shopping decisions with reassurance.

What Is Auto Financing and How Does It Work?

To finance your vehicle purchase, you’ll need to find a lender that will lend you the money you need, and that lender could be a bank, credit union, or other source. You’ll then have a set time period to repay the amount you borrowed along with interest, and you’ll pay monthly payments through that loan term until the auto loan is entirely paid off. For a clearer picture of how financing works, familiarize yourself with these basic financing terms:

• Interest Rate: This is the price that the lender charges you for taking out an auto loan. The total amount is figured as a percentage of the amount borrowed.
• Loan Term: This is how much time you have to pay off your auto loan. Loan terms are usually agreed upon for 36, 48, or 60 months.
• Conditions: Certain conditions might be attached to your auto loan, like rules for early payoff or penalties for overdue payments.

Types of Auto Financing

Lenders offer various auto loans suited to different borrower needs:

• Secured Auto Loans: You use collateral to back a secured loan, and in this instance, the collateral would be the car you’re financing. This gives the lender the right to repossess the car if you default on payments. It also often needs a down payment and involves a lower interest rate than an unsecured auto loan.
• Unsecured Auto Loans: You don’t have to support an unsecured loan with your car or any other sort of collateral, and your eligibility is reliant on your credit score. This loan generally features a higher interest rate than a secured auto loan, and it can be a convenient option if you don’t have to borrow that much money.
• First-Time Car Buyer Loans: If you’re buying your first vehicle, you might be eligible for this loan type, which might offer benefits like a lower down payment or the waiving of certain fees.
• Auto Refinance: If your credit score has gone up since you bought your vehicle, taking out a second loan to pay off the first with a lower interest rate might be beneficial in some cases.

Factors that Affect Auto Loan Rates

These criteria can influence your interest rate:

• Credit Score: If you have a high credit score, then you might be able to secure a lower interest rate for your auto loan. The score itself isn’t the only credit factor lenders consider, and they may look at other info like your debt-to-income ratio.
• Loan Term: If you go with a short loan term, you can usually expect higher monthly payments with a lower interest rate. The loan amount would be paid off in a quicker amount of time, and since you’d have fewer monthly payments to pay off the loan with and a lower interest rate, the amount you actually pay would ultimately be lower.
• Down Payment: Higher down payments typically result in lower interest rates since the amount to pay off has been reduced. To further increase the cash you have available for your down payment, you can use your current vehicle’s trade-in value. Use our Value Your Trade feature to see how a trade-in can increase your buying power.
• Vehicle Age: Because lenders consider newer models less of a risk and less likely to break down, they often offer lower interest rates for new models. Dealers and manufacturers might also offer promotional rates for newer vehicles.

How To Determine Your Monthly Budget

By determining a budget for your next car, you can ensure that the vehicle you buy will work reasonably within your financial means. Common wisdom suggests that your transportation costs shouldn’t surpass 15 percent of your monthly income, so don’t forget that there’s more to those costs than the price tag. You’ll have to account for gasoline or charging costs, car insurance, and maintenance. To see what your auto insurance rate could be, ask for a quote from your preferred insurance company.

Get Pre-Approved for an Auto Loan in Kansas City, MO

When you get pre-approved for financing, you can shop with confidence knowing the sort of funds you can work with. It’s easy to apply for financing with Reiselman Nissan, and with our online finance application, you can get started with just a few simple questions. We’ll help you find the right lender, auto loan, and interest rate for your situation, and we can’t wait to see you in the driver’s seat of the model you want at 9600 NW Prairie View Road, Kansas City, Missouri 64153.