By Michael Mason – Vice President, Lending
It’s fun to dream about the type of car or truck you want – and then to make it a reality as you figure out the financing. A little planning can put you in prime position at the starting line for your new vehicle purchase. Keep these considerations in mind:
How much will you pay up front - a large amount or none at all? The larger your down payment, the smaller your monthly payments will be. While having smaller payments is attractive, you may want to balance the cost with other living expenses or long-term goals for your savings.
Length of Loan
How long until the loan is paid off? Longer loan terms, such as 75 or 84 months, mean lower monthly payments, but you will pay more interest over the life of the loan. Shorter loan terms can increase the amount of your monthly payments, but you will have it paid off sooner and therefore pay less in interest.
A percentage point or two can substantially effect your monthly payments, saving you (or costing you) hundreds of dollars. The interest rate available to you is determined by several factors, including your credit score – which is why it’s a good idea to know it ahead of time.
Lease vs. Buy
Another potential variable is whether leasing or buying the vehicle makes sense for you. If you intend to keep it for a long time, buying is the better option. If you only plan to drive it for a few years, a lease might be preferable. Carefully consider your financial situation, personal preferences, and priorities when making the decision to lease or buy.