Great Falls Auto Loans

More than likely, you will have several Great Falls auto loans from which to choose. We’ll tell you how to evaluate your various loan options here.

Home Equity: To Use or Not to Use

Part of evaluating your options for Montana auto loans involves home equity. If you are a homeowner, you might consider a home equity loan instead of a Great Falls auto loan if it will save you money. Generally, home equity loans have lower interest rates than traditional car loans, and they allow you to deduct the interest on your income taxes. To get a home equity loan, your home’s appraised value must be higher than the outstanding balance on your mortgage. A downside to choosing a home equity loan over a regular auto loan is that your home will serve as collateral, which is too risky for some carbuyers.

New vs. Used

Another decision you will have to make is choosing between a Great Falls auto loan for a new car and one for a used car. Typically, Montana auto loans for new cars have much lower APRs than those for used cars. However, you must also consider the fact that you will save a lot of money by buying used because you avoid the 20%-30% depreciation drop the second you drive the car off the lot. Compare what you would save on the car’s sale price with what you would save on interest to see what type of loan is right for you.

Rebate vs. Low Interest Rate

Many dealerships will give you the choice between cash rebates and low-interest Montana auto loans. If presented with this choice, you should always pick the cash rebate and apply it toward Great Falls auto loans with an independent lender. The low-interest loans the dealer offers are usually not the best deals for two reasons. First, the majority of carbuyers will not even qualify for the rate the dealer advertises. Additionally, the loans usually have ridiculously short terms, which would make your monthly payments excessively high. What the dealer won’t tell you is that, if you choose a low-interest loan, you will probably get overcharged on the price of the vehicle to compensate for the profit lost from the low interest rate. Your best bet is to take the rebate and get your financing from a third party.

What to Look For

When you are evaluating various Great Falls auto loans, the two most important criteria are APR and total cost. The APR, or annual percentage rate, is the cost of the loan on a yearly basis. The APR reflects the interest rate as well as all fees and charges. The lower the APR is on your Montana auto loan, the better. Similarly, you will also want to look at the total cost of the various loans. Total cost can be calculated by multiplying your monthly payment by the total number of payments you will make. Total cost is important because it will show you that the loan with the lowest monthly payments is not necessarily the cheapest overall. Loans with very long terms will always have a higher total cost than loans with shorter terms and the same interest rate even though they might have lower monthly payments.

If you still have some unanswered questions, check out our frequently asked questions.