Your budget – what you can afford

Make sure you anticipate all your costs, including fuel, registration fees, maintenance, insurance, and repairs. Depending on your state, you may also be paying sales tax.

Calculating these costs will help you determine what you can afford, and how much to borrow.

 

Factors that determine your interest rate and monthly payments

Your credit - we consider your credit rating, your payment history, and the amount of debt you already have.

Your income - a stable income that's high enough to pay your debts and other monthly expenses helps you qualify for a better interest rate.

Type of vehicle - interest rates on new cars are usually less than for used cars. RVs and motorcycles may also have different rates. Also remember that used cars over 7 years old may not qualify for financing.

Term of your loan - financing for a longer term lowers your payment, which can add to your monthly cash flow, but will cost you more over the life of the loan.

 

Deciding on the Term of Your Loan - an example comparing a 60 month loan to a 36 month loan

Amount Financed $22,000 $22,000
Interest Rate (APR) 6.00% 6.00%
Term of Loan 36 months 60 months
Monthly Payment $669 $425
Total Paid Over Life of Loan $24,084 $25,500
In this example, you would pay $244 more per month with the shorter term, but you would pay $1,416 more over the life of the loan.