Car Loan FAQ

General Information about Car Loans
Advantages of Having a Car Loan
Disadvantages of Having a Car Loan

General Information about Car Loans

Auto or car loans allows you to buy a new or used car now, then pay for it later. If you have good credit and watch for ads on television you can generally get a very low interest rate on loans. If you get a low interest rate, you cam get a long term loan so you can have small monthly payments. While having low monthly payments is nice, leaving you more money to spend on other important things, there are drawbacks. Cars value go down once it has been used and that can be a problem when you are on a long term loan. So pick your loan term wisely or else you would be paying more of what the value of the car is worth. And if you wanted to trade in your car you would have to pay more money to the car dealer to take the car instead of them paying you money for the car. The best bet is to get a loan payment as large as you can afford, rather than paying for the car in 10 years, try making it between 2-3 years. Of course you can always pay with cash to buy the car instead of getting a loan. With that choice, you usually get a discount for the car. Why they would give you a discount? The dealer will know that they will have the money in their hands and don't have to go out searching for you or the car.

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Advantages of Having a Car Loan

You don't have to worry about how much money you have in your bank to pay off for the car. Just as long as you have the credit, you can easily make small payments every month by the amount you wish. Try negotiating a loan from the dealership, they will probably give you a lower interest rate than a personal loan from a company.

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Disadvantages of Having a Car Loan

Like all loans, you may end up paying a little more extra cash due to the interest rate. But if the rate is low like 0.5% then you won't be paying that much. These loans generally do not affect you too much because they are normally small with monthly payments around $200, but with a minimum wage job that might be a little more of a struggle. Some dealers raise the price of the car when they find out that you need a loan, or say the discounts that are seen through ads are only offer to people who pay cash. So try negotiate the price of the car before you metion that you need a loan.