Shelton Buick GMC Demystifies the Financing Experience with our Financing FAQS
Customers love shopping for a new or used vehicle at our dealership in Rochester Hills, and they certainly don't have issues going on a test drive to get a feel for how the vehicle will live up to their Shelby Township commuting expectations. What often gives people pause is the financing portion. This is understandable, as this is an unfortunately typical experience at other financing centers:
- There's no transparency
- There's that annoying back and forth gimmick between team members
- Shoppers don't understand the process, and dealers make it scarier than it needs to be
At Shelton Buick GMC we want to squash those stereotypes and bring understanding and confidence to the financing process. Here are some Financing FAQ we hear daily. Now you can read up on them from the comfort of your home in Auburn Hills before you even arrive at our showroom!
What is APR?
APR stands for Annual Percentage Rate and it reflects the amount of interest you'll pay each year when you buy a vehicle. Popular APR rates you'll see are:
Of course, we cannot forget to mention the coveted 0% rate for buyers who have long and impressive credit histories. When you first purchase a vehicle, especially if you're a young professional, your financing rate will likely be on the higher side. If you make regular car payments, pay down other loans (like student loans), or get a mortgage and show the bank you can make your payments there, your interest rate will be more competitive the next time you go to buy a vehicle!
What is the financing term?
A financing term dictates how long you'll take to pay off a vehicle, and just like there are common APR rates there are common term lengths:
- 36 Months
- 48 Months
- 60 Months
- 72 Months
The most popular term length is 60-months/5-years. The 72-month rate is a bit long, but if you've bought a few cars in your lifetime, know you enjoy having a vehicle for a long time, and can net the competitive 0% interest rate, going with a 72-month term can be a smart idea!
Are there penalties for paying off your financing term early?
Make sure you speak with the financing member you work with, but you shouldn't be penalized for paying off your car earlier. While it's advantageous to take the shortest term you can comfortably afford, we realize life changes. If you suddenly start making more at your job in Sterling Heights, you can feel comfortable paying down your car faster with the extra income, especially if you have a higher interest rate.
How much should I finance?
You'll see a lot of formulas, percentages, and suggestions for how much you should finance, but the choice is very personal. Like we've mentioned above, unless you can get a 0% rate you shouldn't take longer than 5 years to pay off a vehicle. You should also think about these factors when it comes to owning a vehicle long-term:
- If the car is large will buying winter tires for safe seasonal driving in Troy MI take a big chunk out of your emergency fund that you cannot easily replenish?
- Can you afford the insurance?
- If you're buying a used vehicle can you afford the service costs on an older model?
To get a better sense of how much you can afford to buy, fill out our secure, online financing application before you come into our dealership. You can also get a quote from insurance agents. For younger shoppers, financing a vehicle might be just out of reach, and we might suggest looking into leasing so you can build your credit score to get a lower interest rate in the future, learn about your car preferences, and give yourself a few more years to move into a higher-salary position.
Buying a vehicle is a big step, but we don't think it needs to be the crazy or confusing process that some dealerships make it out to be. Contact us if you have any questions along the way or come in for a test drive once you've finished the online financing application!