Car Finance Options (Page 2)
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Another thing to consider would be the duration of the loan. Never apply for a loan longer than 48 months. This is because if you consider taking a 60 or 72 month loan, you would be paying interest for 5 to 6 years and the warranty of the car would expire in three years time. This would be paying the interest as well as expensive repair bills. Taxes and registration can be about 10 % more on your total cost of the car, so check with your insurance agent before you know what you are getting into.
Most people do not realize that if their monthly payments are low than they are paying 60 months loan instead of the normal 36 months. Thus they sink deeper into debt. Apart from the tenure you need to concentrate on 2 basic things for the best finances: the down payment and the monthly payment.
In order to minimize the total cost of the loan it is advisable to pay at least 20 percentage of the loan. Remember the higher your down payment, the lower the amount you pay per month. This is eventually reducing the amount of interest you pay totally. You could get the down payment by selling your car or trading it in.
You should know how much your car will cost including monthly payment, interest rate, taxes, fees and trade-in value in writing. Do not strike a deal till you are comfortable with everything in writing.
There are numerous online resources that will help you calculate the amount that a bank is willing to lend you, the rate of interest, the monthly payment and the tenure. Use all these means and resources to know the vehicle you can afford and enjoy comfortably.