Car notes, or car loan payments, are the monthly payments made after a car is purchased with a loan from a bank, credit union, or finance company. Some dealers provide financing directly, in which case car notes are made directly to the dealer, but in most cases dealers simply arrange financing with a bank or finance company that he partners with. In that case, car note payments are made to the bank or finance company.
Car buyers who need a loan can apply at a bank or credit union prior to looking for a car. In this way, they can be pre-approved and will know exactly how much they can borrow and what their loan finance rate (interest rate) will be. When they finally decide on a car and are buying from a dealer, they can compare the dealer’s financing with the bank’s financing and go with the best deal.
The finance rate, or interest rate, will be a significant part of the overall cost of a car loan. Different loan providers have different rates. However, the borrowers credit score is the biggest factor that affects what they pay. It’s always a good idea to know your current credit score before you visit a dealer or apply for a loan. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!
When you buy your car and agree to a loan, you may be required to make a down payment, which is typically about 10%-20% of the purchase price. You then begin making car note payments every month on the anniversary of your purchase date. Your loan contract tells you that you must make your payments on schedule every month and not miss any payments. Failure to do so is considered a “default” and can result in the repossession of your vehicle. You’ll also be required to pay off the full balance, in cash, of your remaining balance after the car is sold at auction.
Once your car note has been paid off, the bank or finance company will send you the car’s title, indicating that you now have full ownership of your vehicle, free of any “liens” (loans).