Down payment
Mar 27, 2008 | 10:41 AM
#31
Put as much as you can down! Cars only go down in value and are bad investments in general.
Don't look at the car as the monthly payment - look at it as how much you are going to pay over the life of the car. Don't be surprised if you find out you're paying 2x the car's initial selling cost just through interest and fees.
Just because you can pay the monthly payment doesn't mean you can afford the car.
Don't look at the car as the monthly payment - look at it as how much you are going to pay over the life of the car. Don't be surprised if you find out you're paying 2x the car's initial selling cost just through interest and fees.
Just because you can pay the monthly payment doesn't mean you can afford the car.
Mar 27, 2008 | 12:33 PM
#32
Evolving Member
Joined: Jan 2008
Posts: 332
Likes: 0
From: United States
Put down as much money as you possiby can. Usually, every 1 thousand dollars gives you exactly 16 dollars less per month on your monthly payment. The less money you end up borrowing, the better. Since interest rates are locked in at the time of financing, you're always paying X amount of what you still owe on the car. The less you owe, the smaller the amount of each monthly payment goes towards interest and the more that goes towards principal. As the years pass by and you begin to pay the car off more and more, you'll be glad that you put as much up front as you could. About the worst thing you can do is put nothing down and go for the longest loan period possible. For brand new cars it isn't as bad as with used cars, but it still sucks. To explain further, Imagine buying a used car that is worth 15k, and you put down nothing and finance the car for 75 months. Well, since your payments for the first several years are going towards interest mostly and not that much towards principal. you aren't really paying the car off in proportion to what the market value of the car is. After 3 years, the car is then worth let's say, 9k and you still owe 13k. BAD NEWS! This is called being upside down, and the last thing that you want to have to deal with is negative equity rolling over into your next loan when you buy another car. I by no means am a financial expert, as this is really common knowledge for anyone that has experience financing things, but I just wanted to help out any young guys out there that are new to the game and are about to buy their first car. The last thing that you want to do is jump into a loan for a car that you can't aford and ruin your credit at a young age. Good luck, and I hope that someone found this to be helpful in some way.
Mar 27, 2008 | 01:30 PM
#33
Newbie
Joined: Jan 2007
Posts: 14
Likes: 0
From: Southeast
Put as much as you can down! Cars only go down in value and are bad investments in general.
Don't look at the car as the monthly payment - look at it as how much you are going to pay over the life of the car. Don't be surprised if you find out you're paying 2x the car's initial selling cost just through interest and fees.
Just because you can pay the monthly payment doesn't mean you can afford the car.
Don't look at the car as the monthly payment - look at it as how much you are going to pay over the life of the car. Don't be surprised if you find out you're paying 2x the car's initial selling cost just through interest and fees.
Just because you can pay the monthly payment doesn't mean you can afford the car.
You are not, however, going to pay 2x the price of the car by financing. Loan terms that would results in paying 2x the initial cost of a new vehicle due to financing fees are illegal in most if not all states. On a 5 yr loan you'd have to pay >30% interest to double the cost of the vehicle.
Mar 27, 2008 | 05:40 PM
#35
Evolving Member
Joined: Apr 2003
Posts: 297
Likes: 0
From: Raleigh, NC
I don't see how the math works out for the other poster to get $400/month with $10k down on $37k at 6.1%. Unless of course they are financing for 83 months, which is almost seven years, which is not real common.
I respun my previous spreadsheet to just add a simple down payment calculator, rather than the percentage down table. Now it has both, probably should have put that in from the beginning.
The other thing anyone should understand, is that when a sales person asks "what monthly payment do you want?", you tell him, and then they just calculate out how to get you that payment and maximize the total price you pay for the car. When they ask you that you should just say you would rather negotiate price, and wait until a price is settled before negotiating financing term length and interest rate.
I respun my previous spreadsheet to just add a simple down payment calculator, rather than the percentage down table. Now it has both, probably should have put that in from the beginning.
The other thing anyone should understand, is that when a sales person asks "what monthly payment do you want?", you tell him, and then they just calculate out how to get you that payment and maximize the total price you pay for the car. When they ask you that you should just say you would rather negotiate price, and wait until a price is settled before negotiating financing term length and interest rate.
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