Friday, February 18, 2011

Car Loans

Car loans can be very tricky with dealers having various offers in terms of financing. I will break down a couple options you can get when purchasing a car.

0% Financing
This is a payment plan with no interest on the principal. The downside to this is the sticker price may be higher than what it would be with a 3% interest rate. On paper it sounds like a good deal, but dealers may just increase the price of the car so that it would be no different than paying a low price with a minimal interest rate.

$X Credit with higher interest rate
Don't immediately write off a high interest rate combined with a large cash credit at signing. This ends up lowering the principal on the loan, if combined with the higher interest rate this could even end up being lower than a 0% loan.

$X Credit with lower interest rate
The dealer may attempt to give you a smaller credit at signing combined with a lower interest rate. Again with the other options you may be able to save money with this deal depending on how low the interest rate is in comparison to how much credit you receive at signing.

Cash Purchase - Bank Loan
Another option, depending on how good of a credit and bank history you have. If you can negotiate a low enough cash price and are able to get a loan from your bank this may be the cheapest option. Again it varies on what interest rate you get and low of a cash price you can get.

Loan Length
Dealers will also try and modify the loan length. Typically the longer the loan the more interest you will be paying. Once again you will have to evaluate based on the principal and interest rate.

Get the best deal
When you go to the dealership to get your car get the dealer to give you multiple options. The options should all include varying principals, down payments, interest rates, loan terms and cash credits. Use the calculator on the right side of the blog to type in the variables and see what will give you the lowest monthly payments.

74 comments:

  1. Need something like this just tured 18 and got into all about loans so i can buy a car thx ;)

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  2. Don't be surprised when you find they lied to you about small things like lowering the interest rate or monthly payment by half a percent if you do direct debit or something similar.

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  3. I would advise against getting a car loan. Find a POS car that runs, put down the $1K or whatever it takes to buy it and roll out. No need to spend 30K on a car.

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  4. thanks for the tips. Won't be buying a car anytime soon but I'll keep this handy.

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  5. Hum, so , what is mainly the best loan type?

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  6. I don't really get this stuff.

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  7. I always stay clear of loans... being a student its a bad path to take! Thanks for sharing the tips though!

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  8. Will be using your tips in the future

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  9. actually i'm thinking about buying a car in the next weeks. thanks for the tips. they've really helped. :)

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  10. This is fantastic information. Thanks for putting it out there.

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  11. you should do a post on college loans

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  12. thanks for the tip. i was looking to buy a car myself so this comes rly nice

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  13. very helpful, imma need a student loan soon.

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  14. This is a really unique blog, its gonna come in handy soon with me moving out.

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  15. Good info here. I used to be in the financial field, and loans are tricky for most people. It FREAKS them out when they see how much interest they are going to pay over the life of the loan.

    New Follower!

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  16. This soo helpful. When I get a car loan, I will definitely heed this information.

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  17. Car loan played a bad trick with me when my car was hit. The insurance company refused to pay me directly and transferred the money to bank instead.

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  18. very useful info thank you following this

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  19. Really enjoyed the information on the loans.

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  20. Thanks for the info! Need to think about getting my own vehicle and a loan seems nice at the moment. Thanks for the tips!

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  21. Wow... never knew this about loans. Thanks :D

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  22. Hope I can get a loan when the time comes.

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  23. Wow. This is exceptionally helpful. Thank you!

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  24. good to know, nice post man

    + followed:)

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  25. great post, followed. follow back pls

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  26. the helped me sooo much. thanks a lot!

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  27. nice info, following and supporting!

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  28. im not from the US so i this loans are not usefull to me, but still i will support you ;)

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  29. Excellent! I always confuse the different terms and whatnot. Great reference thank you!

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  30. Great tips! Followed!
    alphabetalife.blogspot.com

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  31. Very useful info! Following you for more.

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  32. Love your blog! Totally going to show my support and follow!

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  33. Outstanding info - will be following! If u care 2 check out my blog on Car Repair tips, I'll be sure and follow you!

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  34. thanks for the tips

    http://turqoisemoon.blogspot.com/

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  35. good text, interesting read :)

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  36. Don't get into buying things on credit- if you can't afford it- don't buy it.

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  37. I try not to loan at all. Its way better, and you get more value for your money if youre able to pay cash straight up. But it was very informative though :)

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  38. loans, cant live with them, can live without them. Coming from a college student :)

    following

    hazdbot.blogspot.com

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  39. thanks for these tips.
    following

    incredible-mo.blogspot.com

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  40. That's truly interesting. You got some nice info going there.

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  41. lol capitalism


    +followed, hit me back up
    http://sextynine.blogspot.com

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  42. Cool site will help me alot in the future..Following

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  43. Be very very very cautious about loans. Life experience :/

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  44. People worrying about loans makes me glad I'm spoiled and got a car that was already paid for. =)

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  45. Wow, just good information! Thank you so much!

    www.blognolife.blogspot.com

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  46. Now this is a good informative blog =)

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  47. buy your cars used off craiglist, skip sketchy car dealers.

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  48. Just got denied my motorcycle loan, feels bad man. +F

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  49. now follwing, great post.

    visit my blog if you want, thanks

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  50. i was going to get a el camino next tues but i may wait and think it through for awhile.

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  51. Following. Check me out:
    tbtmyhtbtm.blogspot.com

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  52. Hi. I really enjoyed my brief visit on your site and I’ll be sure to be back for more.
    Can I contact you through email address?

    Please email me back.

    Thanks!
    Kevin
    kevincollins1011 gmail.com

    ReplyDelete
  53. Hi, I enjoy reading your site! Is it okay if I contact you through email? Please email me back.

    Thanks!

    Harry
    harry.roger10 gmail.com

    ReplyDelete