Finance Your New Vehicle in Fort Lupton, CO

Financing 101 at Yoder Chevrolet

Buying a new car is exciting and fun, but finding the right auto loan can be stressful. Trying to narrow down which financing deal meets your needs is essential before you go signing the dotted line of vehicle ownership. Our team at Yoder Chevrolet has put together a helpful guide so you can be prepared when it’s time for you to purchase your next vehicle.

What Is Auto Financing and How Does It Work?

One of the most popular ways to purchase a vehicle is by borrowing money you intend to pay back over time, known as auto financing. A credit union, bank, or other lender will let you borrow money, and then you repay the lender, with interest, in monthly installments. An auto loan’s core elements include the loan terms, conditions, and interest rate.

Loan Term: The agreed-upon amount of time the borrower has to repay the loan.

Conditions: Rules set by the lender that the borrower must follow or face penalties for late payments.

Interest Rate: How much it costs to borrow money, typically expressed as a percentage.

Types of Auto Financing

There is a wide variety of auto financing available; check out these common types:

• Lease Financing: When you lease a vehicle, you are renting it for a set amount of time which is typically between 24 and 36 months. Then once your lease agreement is up, you can either lease a new vehicle, buy the vehicle, or return it. Monthly payments for leased vehicles are also lower than auto loans; however, you do not own the vehicle.
• First-Time Car Buyers Loan: If you are a first-time car buyer, this loan may be exactly what you need. It has several advantages, like lower interest rates, a waived application fee, and sometimes a lower down payment.
• Unsecured Auto Loans: These auto loans do not use collateral to ensure the payment is made; instead, it uses the borrower's credit score to determine your eligibility. These loans are known for having high-interest rates but could be an option for a buyer with bad credit.
• Secured Auto Loans: These auto loans use collateral, such as your vehicle, to ensure you make payments on your loan. If you default on your loan or stop making payments, the lender can repossess your vehicle.
• Auto Refinance: Replace your current auto loan with a new one. This is typically done if your credit score improves, so you use the new loan to pay off the original loan.

Factors that Affect Auto Loan Rates

Auto loans are affected by:

• Loan Term: The shorter the term, the lower the interest rates will be; while you may have higher monthly payments, you will ultimately pay the loan off quicker, and in the long run, you will have paid less than compared to a longer term.
• Down Payment: How much money you put down on your vehicle also affects your vehicle's interest rate because you will be financing a lower amount. Some buyers choose to trade in their current vehicle and use that vehicle’s value toward the down payment.
• Age of the Vehicle: New vehicles are considered less of a liability and will have lower interest rates than older/used vehicles.
• Credit Score: If you have a higher credit score, then your interest rate will be lower, but you also have to take into account your income and debt-to-income ratio.

How To Compare Auto Loan Rates

Contact a variety of lenders to get a quote and then compare their terms and interest rates so you choose the best financial option for you. You should also account for the annual percentage rate, which includes other loan costs and the interest rate.

How To Determine Your Monthly Budget

If you’re trying to determine your monthly budget, you first need to know your monthly net income, which is the amount you take home after taxes and health insurance. Finance experts recommend you spend no more than 15% of your monthly income on car payments, transportation, and insurance.

Once you know your monthly net income, make a short list of vehicles you are considering and determine the cost of insurance and fuel. Subtract that number from your monthly net income, and that will tell you how much you can afford to spend on your monthly car note.

Reach out to your preferred insurance company for a quote on insurance.

How to calculate estimate fuel expenses

1. Take the average distance you commute and multiply it by the average number of days in a month (30 days).
2. Once you know that number, you’ll need to divide it by the mileage on the chosen vehicle.
3. Multiply that number by the current price per gallon. A good rule of thumb is adding an extra dollar to the current price per gallon to account for fluctuations.

How to Apply For Financing at Yoder Chevrolet

When you're ready to apply for financing, check out our secure online financing application. You’ll need to provide information like your employment and income, and once you’ve submitted your application, our expert finance department will review it and then contact you with your finance options. Don’t hesitate to contact Yoder Chevrolet when you have questions about financing a vehicle, or stop by our dealership located at 601 Denver Avenue, Fort Lupton, CO, 80621, and speak with our experienced team members.