7 Key Questions to Ask When Financing a Car

Most used car shoppers are also shopping for a car loan. You’ve got a lot of information to sift through on the web so at Exit5 Auto Group in Latham we thought it would be helpful to compile the key questions you should ask when financing a car.

Do I need to make a down payment?

A down payment isn't always required for purchase, but it's definitely a good idea.


  • It will reduce the amount you'll need to borrow.
  • It improves your chances of loan approval.
  • You may get better terms with a down payment.
  • It will reduce your monthly payment.

Your trade-in vehicle can serve as a down payment. If you still owe on that car loan, the amount of "equity" you have can serve as your down payment. "Equity" is the difference between your trade-in's loan payoff amount and the actual cash value of your car.

Depending whether you have a trade-in or not, and if you can swing it, any additional down payment - even a few hundred dollars - has a very positive effect in the long term.

How much should my car payment be?

Financial experts recommend your monthly car expenses should not exceed 20% of your take-home pay.

Here’s an example of the 20% rule: If your monthly take-home pay is $3,000, your total vehicle expenses should not exceed $600. Realistically speaking, your car payment should be about $350, leaving $250 for other car-related expenses like gas, insurance and repairs.

Can I get a car loan if I have bad or damaged credit?

Low credit is generally defined as a FICO score under 629. You can have low credit for a variety of reasons, including a history of making late payments to lenders, identity theft or simply not having enough years of credit history.

Your credit score dictates what type of interest you’ll end up paying on your car loan, and a low score can mean a higher interest rate.

Be careful when shopping for a car loan. Auto loan seekers with bad or damaged credit should enter the car loan process knowing they’ll pay a higher rate than someone with better credit. But don’t let that discourage you.

At Exit5 Auto Group in Latham, we successfully provide car loan options to customers with many different credit profiles. We have many years of experience and we'll help you!

Why does the car’s age and mileage affect my financing options?

Many auto lenders are unwilling to offer terms on older vehicles. There's more risk involved and that equates to higher car loan interest rates.

Newer cars tend to finance for lower rates for one simple reason: if you default, and the lender repossesses the vehicle, it will still have a high resale value, allowing them to more effectively recoup losses.

How much car can I afford?

At Exit5 Auto Group in Latham, we recommend that before picking a random price range that you feel comfortable with, you consider all the factors that contribute to the cost of your vehicle.

  • Finance rate and loan term
  • Value of your trade-in (if you have one)
  • Down payment amount
  • Monthly gas and repairs
  • Insurance costs

Information is power. Instead of merely picking a price range, you can use an online loan calculator or better yet, contact us below and we'll help you decide how much you can afford to spend on your next car or truck.

Am I considering all my loan options?

Some people believe that the only place they’ll find a loan option is at the dealership. There are other options available like your credit union, your local bank, and there are even some online options. Do your homework though because some of the online sites promise things that can’t be delivered. At Exit5 Auto Group in Latham we work with banks on a regular basis and have some of the most competitive rates and terms available.

Can I get Pre-Qualified?

Yes, and it’s a good idea!

You’ll already know what type of car to look for once you’ve been pre-approved.

This fast and easy process lets you choose how much you want to borrow based on the type of vehicle you’re looking for. To get pre-qualified on used car financing with Exit5 Auto Group in Latham, contact us at 518-541-5000.

Scroll to top