Auto Financing in Wentzville
October 16, 2018
If you are new to auto financing in Wentzville, there are some things you need to know about the process before you decide to buy a used car. When you are approved for a loan, the dealership buys the car for you and lets you pay them back over several years. The lender benefits when you pay interest to them for the ability to give you a loan.
The interest you pay on financing for trucks or SUVs or used cars for sale is typically calculated only on the amount of the loan. However, it is important to note that you will not be paying equal amounts on the principal and interest each month. Interest and principal are paid down through amortization. This means that you will pay more interest at the start of your loan than at its conclusion. As you continue to make payments on your car loan, the amount of interest decreases while increasing the amount of principal paid.
The length of your loan is a big factor in determining the amount of interest you will pay, no matter what your interest rate. Generally, the longer your auto loan, the more you will have in interest charges, even though your monthly payment may be lower than a shorter-term loan.
You may be able to reduce the amount of interest you are getting charged. If you can add some extra money to your payment each month and designate that it goes toward the principal, this will slowly lessen your interest charges. If you make an unscheduled complete payment (or two or three) every few months, this can substantially reduce what you owe.