How to Get a Car Loan The Right Way

Car Loan

If you want to get a car loan without getting screwed, then read this article because I am going to teach you exactly how to get a car loan the right way. Financing a car is a big deal because if you don't do it the right way you are going to lose a ton of money and you probably going to end up going upside down and your car

I know someone who bought his first car when he was 20 years old and he was soo stupid because he got $20,000 loan for 7 years with 17% interest. Please don't do what he did because he doesn't do any research and he takes bad advice from his friend on how to grow his credit. 

We all know that bad advice would always lead to stupid decisions

Car Loan

Read 3 Biggest Mistakes People Make When Getting A Car Loan

Let Go To The Topic

I would start by saying that financing a car is basically broken in 3 different part, but you have to understand how this 3 different part work in other not to get screwed as the consumer, we would be looking at the

Amount Borrowed
Interest Rate
Loan Length

Those are the 3 different part you need to understand, this 3 different number would determine if you can or can't afford as a monthly car payment so pay attention. Just remember that a monthly payment doesn't determine what you can afford until you apply what am talking about.

Amount Borrowed

Starting with the amount borrowed, this would be your car purchase, taxes/fees and any money that left from a previous car loan, basically, it's what you need to borrow from the bank in other to purchase your car

Make sure to do the research on the car you are buying so that you can get the best deal.

Interest Rate

This is just the amount of money that you have to pay back the bank in other to have your car loan, to get the best interest rate you have to have excellence credit, you have to make sure that you can make your monthly payment every single month because if you late just once you are going to hurt their credit score.

The bottom line is if you have bad credit just stay with the cheap cars so that you can actually make the payment and build your credit along the way or you can pay cash.

You also want to have down payment of about 10-20% to get the best rate, a new car would need about 20% down because of their fast appreciation. I know 20% is a lot but you have to understand that in other to get the best rate you have to make a few sacrifices

If you don't have enough down, you can at least see what the bank would give you. The best car loan interest rate is typically about 3-5% which would cost you about $30-50 a year per $1,000 you borrowed.

If you are financing $20,000 then you are going to be looking at $600-$1,000 a year with interest, but that is optimized credit with a good down payment, and if you are giving a rate that is higher than 5%, then I would highly suggest you work on your credit score or paying cash for the car so that you don't completely upside down on it.

Being upside down on your car means you own more than a car is actually worth and that is not a good thing. When you decide to finance a car I would stick with just Bank & Credit Unions because they always have the best rate

Just shop around online and am very sure you would find the best ones, don't go with your local bank just because you know who they are, that doesn't mean they will have the best rate.

Always go with whoever have the best terms because that is going to save you the most money on your car loan, for example, you can live in new york and finance a car through a company in Canada if they have the best rate and it's also easy to just pay online.

Loan Length

This is the amount of time you would be making a monthly payment until the loan is paid off, Just remember that the longer the loan the smaller the car payment is going to be. Also, remember that the longer the loan is the more you are going to pay an interest

You have to understand this because bank and dealer who just increase the length of your loan in other to complete your payment so you think you are getting a big deal

The monthly payment is only important if you are following the 3 part have been talking about, the length of a car loan should only be about 24-60 months, if you go with anything that is longer than 60 months you are going to see the interest rate increase and you are guaranteed to wast too much money on your car.

The interest rate who go up about 1-2%  for every year you expend past 60 months and that is also for the customer with the best credit score, so don't do anything higher than 5 years. For Example

Let say you buy a car for $15,000 at 4% interest rate for 60 month

Your monthly payment is going to be about $276 a month for the next 5 years and you are going to pay almost $1,575 interest over the life of the loan.

Now, let pretend we buy the same $15,000 car but this time you are going to pay 8% over 84 months, your payment is now going to be $233 a month which is better than the $276 but this a liar because you are now been paying about $4,639 interest for the car loan for the next 7 years.

Now you can see why having a longer loan is a bad idea, it's big liar because your monthly payment might look good on paper but it's total reap off, and after a couple years I guarantee you, you are going to be upside down on your car and you still have 5 years to go on the loan.



Conclusion


Before you go out and buy a car please call your car insurance to find out how much the new car is going to cost you, because if you are looking at fancy BMW and it cost you $150 or more a month with insurance, then it probably worth looking at something else, so call your insurance before you buy a car to know how much it's going to cost.

Just make sure to get them 

  • Best price
  • The best interest rate
  • Make sure you only keep a loan for 24-60 months

If you follow this part correctly I guarantee you, you are going to get the best financing for your car loan. Have a great day

Author:

Hi, i am Micheal, the guy behind Roadtosuccesse. I share tips and tricks to help take a business to the next level, show which systems I personally endorse and use, share what I learn as a student of the game, and help people with personal development so that they can reach their full potential.

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