Financing 101 in Corpus Christi, TX

Auto Financing 101 at Mike Shaw Toyota

Do you need to buy a car but aren't sure how to finance a vehicle purchase? We want to help you make all your automotive decisions with confidence at Mike Shaw Toyota, from picking out the model you want to secure an auto loan. Financing the purchase of a car doesn't have to be complicated, so let's go over the details of the financing process step by step.

What Is Auto Financing and How Does It Work?

Purchasing a vehicle is a big investment, so many car buyers decide to make the purchase fit with their financial situation by taking out an auto loan. When you finance a vehicle, you borrow money from a lender (often a bank or credit union) to complete the purchase. Then, you pay off the auto loan via monthly payments. For a better idea of how auto loans work, get to know this financing vocabulary:

• Interest Rate: Interest is the price you must pay for borrowing the lender's money. It's calculated as a percent of the borrowed amount.
• Conditions: Lenders can add rules or guidelines to your auto loan, like fees for overdue payments or rules for paying off the loan earlier than scheduled.
• Loan Term: This is the amount of time you have to repay what you owe the lender. It's typically 36, 48, or 60 months.

Types of Auto Financing

Depending on your scenario, you have various kinds of auto loans available to finance the vehicle you intend to buy:

• Secured Auto Loans: This loan is backed with the financed vehicle as collateral, so the lender can repossess the vehicle if you default on payments. A secured auto loan may require a downpayment and yield a lower interest rate.
• Unsecured Auto Loans: Since it's not backed with collateral, this loan is considered a higher risk for lenders. It may come with a higher interest rate and could be a convenient means of financing if you're not borrowing much.
• Auto Refinance: Some drivers find that it's helpful to take out a second loan in order to pay off the original auto loan with a lower interest rate. This may be beneficial for you if you have improved your credit score since taking out the first loan.
• First-Time Car Buyer Loans: If this is your first auto purchase, you might be able to take advantage of this loan type, and you could benefit from perks like fewer fees and a low down payment.

Factors that Affect Auto Loan Rates

The interest rate on your auto loan depends on these variables:

• Credit Score: With a high credit score, you may pay a low-interest rate. Remember that lenders look at more than the number, and they might factor in criteria like your debt-to-income ratio.
• Vehicle Age: Lenders see new vehicles as less of a risk and may offer lower interest rates for new models as a result. New vehicles might also be eligible for dealer or maker promotional rates that wouldn't be available for older vehicles.
• Loan Term: If you choose a shorter loan term, you'll have higher monthly payments, but lower insurance rates, meaning you'll ultimately pay less by the end of the loan than you would with a longer loan term.
• Down Payment: If you make a substantial down payment, you can set yourself up for a lower interest rate since you would have less to pay off. You can also use your old vehicle's trade-in value to boost your down payment, so use our Value Your Trade feature for a free online estimate.

Get Pre-Approved for an Auto Loan in Corpus Christi, TX

Applying for financing is as easy as filling out our safe and secure online form. With just a few basic questions, you can take the first step toward owning the vehicle you need, and when you get pre-qualified for an auto loan, you can make informed decisions and purchase your car with peace of mind. We look forward to working with you soon at Mike Shaw Kia.