When looking for used cars 500 down – or any type of used car – it is important to understand the basic elements of purchasing a vehicle. One of the elements of purchasing a vehicle that can be confusing is loan interest. How does interest work on a car loan? This is an important question to ask and get answered before you start visiting buy here pay here dealerships in search of a car.
How Does Interest Work on a Car Loan?
As you visit buy here pay here car lots in search of a car, it will help to know the basics of car loan interest. Interest is extra money that you pay in order to get the loan. The interest is based on a percentage – typically described as the annual percentage rate (APR) – and is part of your monthly payments. Many financial institutions determine what APR you get based on your credit. If you have poor credit, you will pay more money in interest when you go through a traditional lender. In some situations, you will not qualify for a loan at all if your credit is poor. An alternative is to go to a dealership that can provide in-house financing that is based on factors other than your credit score. A great place to start is with a buy here pay here in Phoenix Arizona such as Auto Action.
Are There Ways to Pay Less in Interest?
If you are looking at 500 down used cars, it is probably important to you to save as much money as possible during the car buying process. Interest can be a factor that causes you to spend significantly more on the vehicle over time. There are some ways to minimize the amount of interest you pay over time. One option is to put down a larger down payment. The more you pay on the car upfront, the less interest you will have to pay over time. Another option is to make extra payments toward the principal of your vehicle when you can in order to reduce the amount of time it takes you to pay it off.
Car loan interest can seem difficult to understand – especially if this is your first time purchasing a car. Do not be intimidated by the process! A high-quality dealership will have a team of people who will walk you through every element of the car purchasing and financing process. If you are looking for a large selection of inventory in-house financing with multiple locations give Auto Action a try today!