What Determines your Installment Payments and Interest Rate?
At Freedom Credit, we understand that financing can be the most intimidating part of the car buying process. You may have car finance questions like: how are loan payments calculated? Or, what interest rate can I get approved for? If you've never financed a vehicle purchase before, or if your previous finance experiences with other vehicle credit companies weren't clear and upfront, then financing may seem mysterious and unnerving. But it doesn't need to be that way; at Freedom Credit, we'll work with you to make the financing process clear and easy.
The size of your loan payment will depend on a few factors. One is the amount financed. Let's say you're interested in purchasing a used mid-size sedan in the $15,000 range. At Freedom Credit, we specialize in financing premium pre-owned vehicles just like this, including sedans, SUVs, pickup trucks, and more. Plus, we carry an inventory of approximately 150 vehicles, all reconditioned and warranted, so if you apply for a loan with us we can get you into the car or truck you want. We finance vehicles up to six years old.
Often you would apply a down payment. The bigger the down payment you can make, the more likely you are to get approved for a loan for any given vehicle. So let's say you put down 20 percent, which in our example above would be 20 percent of $15,000, or $3,000. This leaves $12,000 to finance, and this is called the principle.
The next factor is the interest rate, or the percentage that you'll pay in order to borrow the money. Typically the interest rate is calculated on an annual basis, and the anticipated interest is added in with the principle. Then this amount is divided by the term of the loan, typically expressed monthly or bi-weekly. For instance, if you take out a 36-month loan, the amount of principal and interest will be divided by 36 to calculate your monthly payment.
What determines my Interest Rate?
The interest rate that you'll pay depends on a number of factors. One major factor is your credit rating. If you'd like to know what your credit rating is before you start shopping, you can acquire it from Trans Union or Equifax. (Note that in Canada you'll need to pay for a credit report from either agency.) But don't worry if your credit rating isn't stellar: at Freedom Credit we can work with all sorts of credit situations to get you into the vehicle you want. Our rates are often lower than the rates you would get from a bank or other financing source.
At Freedom Credit, our "buy here, pay here" model enables us to offer flexible solutions for car shoppers with less-then-ideal credit situations. We're happy to offer you a no-cost consultation to help you find out where you stand. After that, we're confident that we can get you on the road in the vehicle of your choice in as little as 48 hours. So don't hesitate to give our Finance department a call at (780) 482-3315, or begin the credit application process with our online application today.