Best Personal Loan Companies (2019)
So if you want to get a car loan without getting totally screwed I will show you Best Personal Loan Companies (2019). Because I’m gonna 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’re gonna lose a ton of money and you’re probably gonna end up going upside down in your car no.
My First Car Loan.
I bought my first car when I was 20 years old and I was so stupid because I got a $20000 loan for 7 years at 17 percent interest so please don’t do it I did because I didn’t do any research and I took really bad advice from my friends on how to grow my credit and we all know that bad advice will always lead to really stupid decisions.
Now I’m Jason with the honest finance channel and I make a lot of videos on different financial topics so if you are interested in this type of content feel free to subscribe to the channel or at least give this video a like and now on to the content that you’ve been waiting for. No, I’ll start by saying the financing a car is basically broken into 3 different parts.
But you gotta understand how these different parts work in order to not get screwed as the consumer we’ll be looking at the amount borrowed the interest rate and the length of the loan those are the 3 different parts that you need to understand these 3 different numbers will determine what you can or can’t afford as a monthly car payment.
So pay attention and just remember that a monthly payment doesn’t determine what you can actually afford until you apply what I’m talking about now starting with the amount borrowed this will be your tire car purchase plus any taxes and fees and any money that’s left from a previous Carlo it’s basically everything you need to borrow from the bank in order to purchase your car no.
Make sure to do the research on the car that you’re buying so that you can get the best deal possible and please don’t pay full price for extended warranties or carpet cleaning anything like that because those prices are all negotiable just remember to get the best price possible on your car purchase.
If you need help in this area now as far as the interest rate goes this is just the amount of money that you have to pay back the bank in order to even have your Carlo now in order to get the best interest rates you’ve got to have excellent credit or you’ve got to have a cosigner that has excellent credit in order to make it happen and if you are using a co-signer make damn sure that you can make your monthly payments every single month.
Because if you’re late just once you’re gonna hurt their credit score and trust me they’re gonna be pretty pissed when they go in to get a loan and they realize that you screw their credit score. The bottom line here though is that if you do you have bad credit just stick with the cheap car so that you can actually make the payments and build your credit along the way or you could pay cash and save up like we used to back in the day.
You’ll also want to have a down payment of about 10 to 20 percent to get the best rates and new cars will typically need about 20 percent down because of their fast appreciation I know the 20 percent down is a lot but you’ve got to understand that in order to get the best rates you got to make a few sacrifices.
If you have an existing car that you can sell just take those profits and use those towards your down payment and you probably have enough now if you don’t have very much down you can at least see what the banks will give you because it’s worth a try the best car loan interest rates are typically about 3 to 5 percent which will cost you about 30 to 50 Bucks a year per $0 that you borrow so if your financing $20000.
Then you’re going to be looking at about 600 to $1000 a year in interest but that’s on optimal credit and with a good down payment and if you are given a rate that’s higher than 5 percent and I would highly suggest working on your credit score or paying cash for the car so that you don’t go completely upside down on it. Being upside down in your car means that you owe more than the car is actually worth and that is not a good thing cars naturally depreciate on their own.
Which totally sucks but it is normal but just keep in mind that you don’t want to be paying a ton of interest because you will go upside down in your car now when you decide to finance a car I would stick with just banks and credit unions because they always have the best rates just shop around online and I’m sure that you’ll find a bank really quick and easy and please don’t go with your local bank.
Just because you know who they are because that doesn’t always mean that they’re going to have the best rates just always go with whomever has the best terms because that’s going to save you the most money on your car now as an example I live in Utah and I actually financed the car once to a company in Canada because they have the best rates and it was easy to just pay online dealers can also get you really good rates on car loans.
But just make sure that they don’t get a cut of the interest rates and if they’re not taking a cut to go ahead and use them because it’s a lot easier and you probably only have to give your credit for once and sometimes car manufacturers will even offer their own rates which are typically really good from about 2 percent to 0 percent on new car purchases so if you’re looking into a new car and they offer 0 percent financing and there’s nothing funny about it.
Then that as a seriously good deal. Now if you’ve made it this far into the video please give it a thumbs up to help me out because it’s always much-appreciated thanks and finally let’s cover the length of the loan which is the amount of time that you’re gonna be making monthly payments until the loan is paid off just remember this the longer the length of the loan the smaller your car payments are going to be but just remember that the longer the loan is the more that you’re going to pay an interest and this is what you have to understand this.
Because banks and dealers will just increase the length of your loan in order to get your payments were you want so that you think you’re getting a good deal the monthly payment is only important if you’re following the 3 parts that I’ve been talking about now the link to the car loan should only be about 24 to 60 months if you go with anything that’s longer than the 60 months you’re going to see the interest rates increase and you’re guaranteed to waste way too much money on your car.
Typically the interest rates will go up about 1 to 2 points for every year you extend past 60 months and that’s also for the customers with the best credit score so please don’t do anything higher than 5 years so let’s say that you buy a car for $15000 at a 4 percent interest rate for 60 months your monthly payment is going to be about 300 Bucks a month for the next 5 years and you’re gonna pay almost 1600 Bucks an interest over the life of the loan.
Now let’s pretend that we buy the same $15000 car but this time you’re gonna pay 8 percent interest over 84 months your payments now going to be 200 $33 a month which is better than the 276 but this is all a lie because you’re going to pay a ton more in interest you’ll now be paying about 40 $600 in interest for the car alone and you’ll be paying on it for the next 7 years.
So how can you see why having a longer loan is a bad idea it’s all a big fat lie because your monthly payment might look good on paper but it’s actually a total rip off and after just a couple years I guarantee you your gonna be upside down in your car and you’ll still have 5 years to go on the loan did you know that the average car loan is 68 months long at 4.2 percent interest for $30000 borrowed those are really scary numbers.
Because it proves that most of us are buying way too much car no I want to make a quick note here about car insurance 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 because if you’re looking into some fancy 7 series BMW and it cost you 150 Bucks more a month in insurance and it’s probably worth looking into something else so just call your insurance before you buy a car.
so that you know how much more it’s going to cost and now after all of this information you know how to finance a car just make sure to get the best price for the car the best interest rate and make sure that you’re only keeping alone for 24 to 60 months and if you follow these 3 parts correctly I guarantee you you’re going to get the best financing possible for your Carla.