Auto Financing FAQs | Luther Brookdale Toyota Scion

There is a lot of financing jargon out there on financing a car. It’s just plain confusing. 

Your friends at Luther Brookdale Toyota Scion in Brooklyn Center wants you to be informed before you finance a new vehicle. We have answered a few of the most common auto financing questions below.

What does it mean to finance a car? 
To put it simply, financing a car lets you buy now, drive now and pay later. Car financing is a form of credit. You borrow a certain amount of money for a certain period of time at a certain rate. 

Where do you get car financing? 
You can finance a vehicle at any financial institution, such as banks, credit unions and car dealerships. 

How do you finance at a car dealership? 
When financing at a dealership, you and the dealer create a contract where you buy a vehicle you agree to pay over a period of time. This includes the amount financed plus a finance charge. The dealer can decide whether to posses the contract or sell to a bank, finance company or credit union. This entity will service the account and collect payments. 

Are there benefits to financing at a car dealership? 
Yes, there are several benefits. Dealer financing can be more convenient than going through a bank because a dealer, like Luther Brookdale Toyota Scion, offers you a one-stop-shop for financing. The dealership will also have convenient hours on evenings and weekends.

A dealer offers many financing options because they have built relationships with a variety of banks and finance companies. This in turn will allows you to probably get a better financing option. 

Dealers offer special programs to help you save money. These include incentive program and low-rate programs. So, make sure you check if you are eligible. 

See our Military Rebate.

What factors will affect my interest rate? 
There are at least four factors that can affect your interest rate. These include: 
  • Credit Score - The most important factor is credit score. Your score is based on your debt payment history. Lenders use this to assess whether to approve a loan. Thanks to our financial experts, we can work with good, poor or no credit. We work to get the best interest rate possible. 
  • Loan Duration - Choosing to pay off your loan over a longer period of time, as opposed to a shorter period of time, will result in a higher interest rate. 
  • Monetary Policy - The U.S. Federal Reserve can affect interest rates on auto loans. It sets an interest rate called the “federal funds rate” which determines the interest rates banks charge one another for loan reserves. Banks tend to base the interest rates they charge on consumer loans and the federal funds rate. 
  • Inflation - Lenders can charge interest on loans to counteract inflation, which is the rate at which prices are increasing in the economy. High inflation can lead to higher interest rates. 

When you’re ready to test drive a Toyota for sale in Brooklyn Park, MN, our helpful sales team members are ready to assist you. Give us a call at 888-379-7580, or submit your questions here

Luther Brookdale Toyota Scion proudly serves Brooklyn Park, Brooklyn Center, Robbinsdale, Minneapolis, St. Paul, Crystal, Fridley, New Hope, Coon Rapids, Columbia Heights, New Brighton, Maple Grove and Hilltop.

Categories: Finance