About principal and interest If you purchase a new or used car with a loan, you agree to pay off the loan amount (principal) over a specified number of months. But you also agree to pay a finance charge, or interest, for the privilege of using the bank’s (or finance company’s) money for your purchase. […]

How much down payment do I need for my car loan? Until recent times, it was standard for car dealers and finance companies to require at least 20% down payment on the purchase of a car. It was for a good reason. Because cars depreciate in value from the moment they are driven off a […]

For many people, an auto loan is the most significant and largest financial transaction they make in their lives — at least until they get a home mortgage. Because it is so significant, it makes sense to take the right steps and avoid mistakes in the process. 1. First, shop around for auto loans at […]

Is it possible to sell a car if you are still making loan payments and the loan is not yet paid off? This is a very common question with car buyers and owners. The answer is yes, you can sell the car, but you must get enough money in the sale to pay off your […]

Buying a car with a low credit score? Having bad credit means that sometime in your past, possibly as far back as seven or ten years, you have had missed or late loan payments, repossessed property or cars, or have declared bankruptcy. You may also have an excessive number of credit cards with high balances. […]

How Are Car Payments Calculated? Car payments are based on how much you borrow, the interest rate, and the length of the loan. The more you borrow, the higher the payments. The higher the interest rate, the higher the payments. The longer the loan, the lower the payments. Unfortunately, the formula for calculating monthly car […]

If you still owe more on your loan than your car is worth, you are upside down. You may still be able to buy another car if you are upside down on your previous loan. There are two ways to go about it. One way to buy with an upside down loan You could sell […]

Uninformed automotive consumers often confuse car leasing and car renting. They sometimes think the two are the same. They would be very wrong. The confusion is somewhat understandable because of the similarity of terms to that of apartment leasing and renting. Many of us can remember our parents telling us that renting or leasing an […]

You, the car buyer, wish to purchase a car but you don’t have the necessary cash. You need a car loan. A bank or credit union can provide you the loan you need, or your car dealer can arrange the loan for you with a bank or finance company that he works with. Understand that […]

Refinancing your car loan can often lower your monthly payments. Auto loan interest rates are hovering at the lowest rates seen in many years. If you are currently paying a high rate, you may be able to benefit by refinancing at a lower rate. Depending on the value of your car and the amount you […]

How do I know how much car I can afford? Assuming you’ll buy with a loan, you will want to have a monthly car payment that will fit within your current income, after considering all your other expenses. Don’t make the mistake of buying based on future expectations — a forthcoming raise, a new job, […]

A Car Loan Story David, 17, recently graduated from high school, landed a good paying job, and wanted to buy a new car. His thought was that he would go to his neighborhood Ford dealer where he had been admiring a bright red Focus model that he felt he could afford, and arrange for a […]

Is it possible to get a car loan and buy a car with no credit? The answer? Yes, under some conditions. Let’s explain. It is a common situation, especially with young people who have never had a loan, never had credit cards, or never borrowed money for a car. Without a history of prior loans […]

Although we’ve discussed this topic previously (see Lease vs Buy), there is one aspect that we haven’t discussed and continue to hear questions about. The question is essentially this: “If a car dealer is offering a special promotional lease deal, a purchase rebate, and a low interest loanĀ on the car I want, which one is […]