What Factors Affecting Car Financing Costs

When it comes to car loan financing, few names are as iconic as Philly Auto Loan Center. Known in Philadelphia for financing some of the finest automobiles, Philly Auto takes pride in having the largest selection of Pre Owned vehicles. Our reputation in the Philadelphia area is built on a commitment to transparency, a customer-friendly experience, and consistently exceeding expectations. It’s important to mention that our staff shows remarkable loyalty, with most team members being with us for 15+ years, and some for even 40+ years.  We’re a family-owned business, and we treat our customers and employees as extended family members. We are grateful for the support of our customers and eagerly look forward to serving our community to the best of our abilities.

How We Can Help

In a matter of seconds, you will receive the financing offers with individual annual interest rates from various banks. You can choose the best offer and apply for it directly.

Within seconds, you will receive financing offers, each with its own annual interest rate, from various banks. You can select the most favorable offer and apply for it directly.

Factors Affecting Financing Costs

The cost of financing depends on two key factors: the effective interest rate and the loan term. The interest rate is determined by your creditworthiness.

Many banks adjust the interest rate based on the borrower’s creditworthiness. A higher credit rating signifies a lower risk of default for the lender. Consequently, banks offer more favorable interest rates to those with better credit, while those with lower creditworthiness may face higher interest rates.

Proper Loan Term Planning

When it comes to determining the loan term, it’s essential to ensure that you are paying down the loan faster than the value of your used car is depreciating. This way, you avoid ending up with a remaining debt that exceeds the resale value of the car when you decide to sell it. A safe approach is to have your car loan fully paid off within six years of owning the vehicle.

Ideally, the loan term should not exceed five years. For a three-year-old used car, it’s advisable to spread the payments over a maximum of 36 months. Ideally, the loan term should align with the period you intend to keep and use the car, and in the case of a used car, the expected lifespan of the vehicle.

In addition to the interest rate and loan term, both the initial down payment and the final installment also play a role in influencing the interest costs associated with used car financing.