What To Know About Financing Your Car
Hawk Volkswagen is not only your Volkswagen dealer in Orland Park. We’re also the #1 volume Volkswagen dealer in Illinois based on 2018 retail sales. When you’re ready to trade, at Hawk Volkswagen we always we’re always ready to offer competitive rates and terms on our great selection of new and used cars, trucks and SUVs.
Of course, we hope that you’ll finance your vehicle with us, but whatever your choice, here are some finance essentials you should know.
Know your credit score
Simply stated, the better your credit score, the greater your chances of getting a lower interest rate on your car loan. If your FICO score is 750 or higher, you’ll probably qualify for a lower interest rate, but if your score is below 650, be prepared to pay a higher rate when you finance your loan.
Free online tools like Credit Karma can help you understand your credit score and give you an idea of what interest rate you may be offered.
Keep the term as short as you can afford
Shorter term loans come with lower interest rates and higher monthly payments, and, ideally, that’s what you want. It’s tempting to stretch your loan repayment out over five or six years, to get a lower monthly payment. But honestly, that means you’ll be paying more in interest over the lifetime of the loan, and it’s even possible to find yourself upside down on the value of your vehicle.
Put 20 percent down
In addition to a short-term loan, you can avoid a situation where you owe more than the car is worth by putting more money down, something like 20%. Without a decent down payment, if at a future time you need to sell your car, you may not be able to sell because you owe more on the loan than the car is worth.
Avoid gap insurance
Gap insurance (guaranteed auto protection insurance) covers the “gap” between what you still owe and what your insurer thinks the car is worth if it’s totaled in an accident. If you put up that recommended 20% down payment and stick to a three-year loan, you shouldn’t need gap insurance.
Now that you’re “in the know,” come by Hawk Volkswagen, and let us put you behind the wheel of a new Volkswagen today. We’re ready to trade when you are.