When shopping for a vehicle, it is easy to focus on the price listed on the window sticker. But the vehicle price is only one part of the equation when determining how much you will pay each month.
Your auto loan payment can also be affected by the loan term, interest rate, credit score, taxes and fees, trade-in value, down payment, and optional products added to the loan.
Loan Term
The length of your auto loan can have a significant effect on your monthly payment. A longer loan term generally spreads the amount you borrow over more payments, which can reduce the monthly payment. However, you may pay more interest over the life of the loan.
A shorter term may result in higher monthly payments, but it can help you pay off the vehicle sooner and potentially reduce the total interest paid. When comparing loan options, look beyond the monthly payment and consider the overall cost of financing.
Interest Rate
Your interest rate is another major factor in determining your payment. Even a relatively small difference in rates can affect how much you pay over the life of the loan.
Singing River Federal Credit Union offers
auto financing for new and used vehicles, with a range of terms and competitive fixed rates. Getting pre-approved can also help you understand your potential financing options before you begin negotiating at the dealership.
Your Credit History
Your credit history can influence the interest rate and loan terms you qualify for. Lenders may also consider your income and other financial information when determining whether to approve the loan and how much you may be eligible to borrow.
If you have limited or no credit history, that does not necessarily mean vehicle ownership is out of reach. SRFCU offers a First-Time Auto Buyer Program for eligible applicants ages 18–25. Employment history, income, and other credit evaluation factors are considered as part of the approval process.
The program is designed to help qualifying first-time buyers establish credit while financing a vehicle.
Taxes and Fees
The amount you ultimately finance may be higher than the vehicle's advertised price because of taxes and other purchase-related fees. Depending on where you buy the vehicle, these costs can include sales tax, title and registration expenses, dealer fees, and other charges, so ask for a complete breakdown of the total purchase price before agreeing to the loan.
Trade-In Value
If your current vehicle is worth more than you owe on it, you may be able to apply the trade-in value toward your next purchase and reduce the amount you need to finance.
However, make sure you understand your current loan balance if you still owe money on the trade-in. If you owe more than the vehicle is worth, the remaining balance may affect the amount you need to finance on your next vehicle.
Down Payment
A down payment can reduce the amount you need to finance. The more you pay upfront, the less you may need to borrow.
Estimating insurance, registration, and other purchase-related costs, along with ongoing expenses such as fuel and maintenance, can help you develop a more realistic picture of what a particular vehicle may cost to own.
Optional Add-Ons
Dealerships may offer optional products and protection plans that can increase the amount financed and, consequently, your monthly payment. Examples can include extended service contracts, vehicle protection products, and Guaranteed Asset Protection (GAP).
Some optional products may provide valuable protection depending on your circumstances, but it is important to understand what each product costs and whether it fits your needs before adding it to the loan.
Local Auto Financing for South Mississippi Drivers
Whether you are purchasing your next vehicle or buying your first car, Singing River Federal Credit Union can help you explore financing options that fit your situation.
Visit SRFCU to learn more about auto loans, explore the First-Time Auto Buyer Program, or give us a call at 228-475-9531 for more information.
