Many customers fear a financing process that’s tedious and confusing, with complicated terminology at every turn. Not at South Strand Chrysler Dodge Jeep RAM! Our finance specialists take the time to learn more about your budget and lifestyle, ensuring the custom deal we craft meets each of your unique needs. After providing a few details, just leave the heavy lifting to us! Before long, you’ll be back on the road – behind the wheel of your dream car!
Our finance experts have provided some helpful insight below, so read on to learn more about Chrysler, Dodge, RAM or Jeep financing!
Car Financing Explained
Financing Lingo Defined
You will likely hear these terms used during the financing process, so it’s important to understand them! Here’s what you need to know:
- Automotive financing: Refers to the use of a loan to finance the sale of a vehicle
- Car loan: Involves the pairing of a borrower and lender to purchase a vehicle, with the borrower making monthly payments to pay back their debt over time
- Principal: The original amount of money borrowed
- Interest rate: The amount charged in addition to the money borrowed (principal) that the borrower must pay to the lender over the course of the loan term
- Annual percentage rate (APR): The total cost that the borrower pays on the loan each year, including fees charged for the loan
- Loan term: The number of months over which payment on the loan is made
The Financing Process
Here at South Strand Chrysler Dodge Jeep RAM, our on-site Finance Center will walk you through each step of the process, answering any questions that arise. The process starts with pre-approval, a crucial step that will let you know your buying power and help you set your budget. The loan amount you are pre-approved for is based on your credit score, current debts, income, and more.
There are several sources that offer pre-approvals, with credit unions typically providing more favorable rates than traditional banks. Local banks, however, are an option for many car buyers. Dealerships may provide financing as well, with vehicle manufacturers setting the interest rate. For instance, we offer Dodge finance offers, Chrysler incentives, and Jeep financing deals to ensure our customers receive the best rates available!
Types of Car Financing
Financing Through a Dealership
Many customers choose to finance their new ride through the dealership, with the dealer facilitating the process between the buyer and lender. In many cases, dealership financing comes with higher interest rates – but is still an appealing option because of the convenience it offers. In fact, in-house financing may be the only option for sub-par credit customers who fail to qualify for a loan from an outside source.
Direct Auto Lending
Credit unions, banks, and online lenders offer direct financing too. Many customers seek pre-approval from one of these sources before initiating their car search, using the loan amount to set their budget. With their loan already pre-approved, customers can compare prices between dealerships. Unfortunately, some dealers mark up the interest rate for customers who choose this option.
Understanding Interest Rates
As defined above, interest refers to the fee incurred for borrowing money. This amount is paid on top of the principal (loan amount), going directly toward the lender’s profits. Because no two loans are alike, determining a “good interest rate” is nearly impossible. That’s why comparison shopping is important, because you can be sure of one thing: the lower the interest rate, the better!
To dive a little deeper, interest on a car loan is calculated using simple, not compound, interest. That means that the interest itself does not earn additional interest. It’s also important to note that, while longer loan terms come with more affordable monthly payments, you will end up paying more over time. Customers with good credit are often rewarded though, securing the lowest interest rates available.
In addition to improving your credit, these tips can help you secure a great rate:
- Shop around and compare lenders.
- Buy when the economic environment has slowed.
- Choose a shorter loan term if possible.
- Refinance in a few months if interest rates drop.
- Choose a more budget-friendly vehicle.
Have More Questions About Financing Your New Ride? Call Today!
If you’re interested in learning more about our simple, streamlined financing process, feel free to get in touch! Whether you’re seeking Dodge incentives or Jeep financing offers, we’ve got you covered! Plus, if you’d prefer to lease instead, we offer Jeep lease deals, RAM lease deals, and more!
Our team is here to help, so contact South Strand Chrysler Dodge Jeep RAM today!