Things to consider when getting an auto loan

Before you hand over your down payment or sign up for that loan, make sure you understand your financing options first and choose the financing package that is right for your needs and circumstances.

A car is a huge investment. It is important for you to understand the implications of whatever financing option you will avail of and find the one that suits you best.

There are three options available to car buyers: a) cash, b) low down payment scheme and c) zero or low interest packages. Each option has it pros and cons, depending on your cash flow and cash at hand.

For those who have enough cash and whose cash flow would not be disrupted by a considerable purchase, then cash or the low interest package, which necessitates a big down payment, is best. When taking a car loan, one must consider these factors: the down payment, interest rate, perks and promos.

“The greater the equity, the lesser the monthly payments,” Alan Matutina, senior vice president for SME and Consumer Finance of GE Money Bank, said.

That is, the bigger the down payment, the less one has to pay each month. The standard is 20 percent equity. Ideally, one should use 30 percent equity to lessen amortization payments.

On the other hand, for those with cash flow considerations who may find shelling out cash heavy, then the low down-payment scheme would be best. This way, the person can opt to use the extra money for other important expenses. However, since the down payment is low, he will have to pay more in monthly amortization payments. In choosing how long your loan term should be, remember that the longer the tenor, the smaller the monthly amortization would be. Of course, this also means more interest payments are made over the entire payment period of the loan.

There is no written book or formula that states the best option to take for a car loan. Car loan packages can be flexible and the decision on which option to take depends on the borrower’s needs and capacity. Fortunately, there are now several options available to those who want to own an automobile.

GE Money Bank’s Auto Loan makes life simpler for the would-be car owners through its fast turn around time and a low interest rate. The bank also offers low charges on chattel fees and insurance. Its personalized service guarantees car buyers a customized, hassle-free experience. Borrowers need not go to the dealer. They simply choose the model and GE Money Bank will ask the dealer to deliver it.