First Time Buyers FAQ - Car loans made simple
Looking to buy your first vehicle and have a few questions? Port Hope Hyundai is here to help!
We understand that not every buyer has previous vehicle credit history and we make it possible to get into your first vehicle quickly and easily. With our no-nonsense process and straight forward financing and leasing requirements we will get you on the road!
First Time Buyers Frequently Asked Questions
Do you need to make monthly payments?
While some buyers choose to pay for their entire vehicle at time of delivery, the majority of people choose to finance or lease their vehicle with a more manageable monthly, bi-weekly, or weekly payment schedule to allow for a more flexible purchase decision.
What is the difference between leasing and financing a car or truck?
When you finance a vehicle with a car dealership or lender, you are making payments toward ownership of the vehicle. Your payments go toward both the principal and interest on the loan until the complete cost of the vehicle including tax and licensing is paid.
However, if you choose to lease a vehicle the payments apply only towards the time you will be using the vehicle. The total sum of payments covers the vehicle's depreciation over the lease term and not the full purchase price of the vehicle. At the end of the lease term you have the option of simply returning the vehicle to the dealership or buying out the remaining value of the vehicle.
What does “Transfer of Ownership” refer to and when does it occur?
If you are financing a car or truck, the loan ends when the vehicle is paid in full and the ownership is then transferred to you. Your lender will send your title that had been held during the financing period of the contract.
If you choose to lease a vehicle, when the lease period ends you must return the vehicle to the lender, or choose to buy the vehicle at that time. During the entire lease period the lender maintains ownership and is allowing you to use the vehicle for a similar term rental. Ownership is transferred to you if you choose to purchase the vehicle after the lease ends.
How big is the down payment?
In most cases, a down payment is not required but it can range between 10 and 20 percent of the vehicle's initial cost. The size of your down payment will affect the monthly payment.
The less money you use for your down payment the higher your monthly payment. Likewise, the more money you use for your down payment, the less you will owe with each monthly payment.
Can I finance other fees and charges?
Yes, registration, taxes, extended warranty plans, winter tires, accessories and other charges may be included in your financing payments.
Should I finance or lease my vehicle?
This is a personal decision for each car buyer to make, and depends on your own set of circumstances. Both options offer a great deal of flexibility and allow you to drive away in a new car much sooner. Feel free to talk to any one of our financial service consultants to find the best solution for you.
Car Financing Frequently Asked Questions
How is the finance loan rate decided?
The finance rate depends on your own personal credit history, the amount currently borrowed, the length of the term, and the year, make and model of the vehicle you are planning to finance. A bigger down payment lowers the amount borrowed which reduces your payments and may also reduce the loan rate.
What is the car loan time frame?
Car financing time frames can range as long as 8 years depending on the year of the vehicle being purchased, but this is largely dependent on how long the customer is choosing to finance the vehicle and the model age of the vehicle. Some used cars may only qualify for a 3 or 4 year finance term.
It is also important to note that used car loans have some difference to new car loans as the interest rate can be higher based on your credit history and the make/model of the vehicle.
Car Leasing Frequently Asked Questions
How are the monthly lease rates determined?
To create a lease agreement, Hyundai calculates the extent to which a vehicle will depreciate over the lease term and then compare it against the cost of financing vehicle during the same time period.
To determine this, there are 3 important factors:
First, the vehicle depreciation cost is determined. This value represents the real purchase price after down payment, incentive discounts, additional fees and taxes are included and the residual value needs to be determined by estimating the value of the vehicle at the end of the lease.
Second, the residual value needs to be determined by estimating the value of the vehicle at the end of the lease. Once this is decided it is then deducted from the capitalized cost to yield a depreciation figure.
Third, a lender determines the money factor, a number that correlates with the cost of borrowing money towards your vehicle use during the lease period.
How is the purchase price decided at the end of the lease?
The purchase price is decided largely by the residual value determined at the start of the leasing term. To purchase the vehicle at the end of the lease requires you to pay the fixed residual value plus any applicable taxes or fees.
Are there any restrictions to driving a leased vehicle?
Mileage terms are established at the start of the lease term to ensure the vehicles will be saleable for use at the end of the lease. Most leases include a mileage limit and excess mileage may incur additional charges.
In most cases the permitted mileage under ordinary driving conditions is between 16,000 and 25,000 kilometers. Beyond the established mileage limit, fees may occur up to 10¢ per Km basis. Leasing can be a great option whether you are a low or high mileage driver, but it is best to speak to one of our financial services consultants to determine the best option for you.