Truck Loan
|
Truck loans are financial packages for individuals who wish to purchase a truck for transportation purposes and do not have the cash on hand required to fully complete the purchase. A truck loan tends to be larger than an automobile loan because trucks are typically a more expensive mode of transportation. Before applying for assistance, it is important for the borrower to know their price limit and maximum monthly payment they can afford, including insurance, taxes and plates. Seeking financial assistance should be a last resort for those who intend to purchase a vehicle. Experts say that payments should not exceed 10% of an individual's gross income.
Most lending programs usually require some sort of down payment. Experts recommend that a borrower never receive a truck loan for more than 80% of the purchase price. This means that the borrower should make a cash or trade down payment of 20% of the purchase price. The amount of the down payment can negotiate the purchase price. Before applying, it is important to attempt to negotiate price and interest rates. Truck loans can carry a higher interest rate for those that are ignorant to the vehicle buying process.
The consumer must beware of lenders or dealers offering a 0%-3% interest rate. This rate may only apply to certain makes and models or short term truck loans up to 12 months. It is a way to get the customer in the door and utilize the dealer's in house financing. The dealer makes money off the borrower using their truck loan as opposed to another lender. The lenders that sponsor the loans give bonus fees to the dealer. Before letting the dealer know that there is an interest in utilizing their in house financing, it is wise to negotiate the price.
If the dealer knows that their lending program will be used to finance the vehicle, then they may choose to forgo any negotiations on price, since their fee is percentage based on the purchase price. It is better to get pre-qualified for a truck loan through another lender, such as a bank or credit union before choosing to use the dealer's lending program. Chances are that a private lender chosen by the buyer will offer a lower interest rate and better financing options. Seven out of ten new trucks are bought with the funds from truck loans. Interest rates on new vehicles are typically lower than interest rates on used trucks. It is advised to shop around for financing before visiting a dealership to purchase a vehicle. This allows the individual to gain knowledge on various vehicles, prices, and interest rates. "Discretion shall preserve thee, understanding shall keep thee" (Proverbs 2:11).
|
|
|
|
