First Bank of the Lake: 5 Questions To Ask Before Taking Out A Car Loan

There are two kinds of debt - the kind that can be helpful to your overall financial picture, and the kind that can be detrimental. Helpful debts are those that allow you to make necessary purchases and build a strong credit rating. Detrimental debts are those that make your monthly budget so tight that you don't have room for essentials (causing you to miss payments) or debts that have outrageously high interest rates. We talk frequently about detrimental debts and you can get out from underneath their grasp, but this week, our banking experts at the Lake of the Ozarks are here to discuss a beneficial debt: auto loans.

Taking Out A Car Loan

Taking out a car loan can be a great way to fund the purchase of a new vehicle. Since buying a car often makes much more sense financially than leasing, an auto loan can be a great way to make this purchase a possibility. Before finalizing your new loan, however, it is important to make sure you are making the loan choice that makes the most sense for you.

Questions To Ask Before Taking Out A Car Loan

First Bank of the Lake is here to help you make the right decision. Before taking out your next car loan, be sure to ask your lender the following questions.

1. What Is The Loan Term?
The average term for car loans has been steadily increasing over the years. While short-term loans are still available, car loans are now offered for as long as 60, 72, or even 84 months. Before officially signing your new loan, find out what the term is and make sure you are comfortable with it.

2. Is This A Fixed Interest Rate?
Some car loans offer fixed interest rates, which means that the rate will stay the same throughout the duration of the loan. Other loans offer variable interest rates, which means that the rate may change during the course of the loan. In order to ensure your financial security, a fixed rate loan may be the better bet.

3. When It's All Said And Done, How Much Will I Have Spent On My Car?
In order to determine which loan option is the cheapest, it is wise to ask this question; the cheapest loan is not always determined by the lowest interest rate. For example, a loan with a higher rate may still be cheaper in the long run if it has a shorter term.

4. Is My Monthly Payment A Fixed Amount?
Most people find it much easier to plan their monthly budgets when they know exactly how much certain payments will cost them each month. Before officially signing on your new loan, find out if the projected payment about will remain constant on a monthly basis. If you have a variable interest rate or a balloon payment at the end, for instance, this payment amount will likely change.

5. Can I Pay Off My Balance Early?
It can be impossible to predict where your financial future is headed. Once you get your principal balance down to a manageable amount, or if your financial situation should improve significantly before then, you may want to pay off your remaining balance in full. Some lenders charge a penalty fee for this. Ask your lender to see if they allow this an option and if you will be penalized for it.

First Bank Of The Lake Can Finance Your Auto Loan!

If you are considering taking out a car loan at the Lake of the Ozarks, contact our local bank in Osage Beach MO. We offer a variety of personal loans at the Lake of the Ozarks to help you finance the purchase of your new car quickly and easily. For more information about our auto loan options, visit our website or call us at 573-348-2265.

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