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How do I get a Car Loan?

How do I get a Car Loan?. A basic overview. If you have cash…. Use it, buy the car!. I have cash but…. I don’t have the full asking price of the car. I have cash but…. I don’t have the full asking price of the car. Use what you have as the down payment on the car. I have cash but….

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How do I get a Car Loan?

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  1. How do I get a Car Loan? A basic overview

  2. If you have cash… • Use it, buy the car!

  3. I have cash but… • I don’t have the full asking price of the car.

  4. I have cash but… • I don’t have the full asking price of the car. • Use what you have as the down payment on the car.

  5. I have cash but… • I don’t have the full asking price of the car. • Use what you have as the down payment on the car. • A good goal is 20% down payment.

  6. I have cash but… • I don’t have the full asking price of the car. • Use what you have as the down payment on the car. • The more $ you put as a down payment, the lower your monthly payment will be.

  7. I have cash but… • I don’t have the full asking price of the car. • Use what you have as the down payment on the car. • The more $ you put as a down payment, the lower your monthly payment will be. • Also, the more $ you put down, the less interest you will pay.

  8. The Loan • Who do I borrow the money from?

  9. The Loan • Who do I borrow the money from? • There are several possibilities: • Your bank/credit union. If you have a savings/checking account your bank may offer you a loan.

  10. The Loan • Who do I borrow the money from? • There are several possibilities: • Your bank/credit union. If you have a savings/checking account your bank may offer you a loan. • A third party bank. This is a bank that you don’t have an account with, but they frequently do business with the car dealer and will extend you a loan. The dealer will collect info from you and submit it to the bank while you wait.

  11. The Loan • Who do I borrow the money from? • There are several possibilities: • Your bank. If you have a savings/checking account your bank may offer you a loan. • A third party bank. This is a bank that you don’t have an account with, but they frequently do business with the car dealer and will extend you a loan. • In the case of a new car dealer, through them. GM, Ford, Chrysler have their own lending institutions.

  12. The Loan • Who do I borrow the money from? • There are several possibilities: • A third party bank. This is a bank that you don’t have an account with, but they frequently do business with the car dealer and will extend you a loan. • In the case of a new car dealer, through them. GM, Ford, Chrysler have their own lending institutions. • Buy Here, Pay Here. Watch out! A BHPH dealer finances you themselves, but charges extremely high interest rates

  13. What kind of interest rates are we talking about? • New Cars vary from 0% up to 8%.

  14. What kind of interest rates are we talking about? • New Cars vary from 0% up to 8% • Used car loans vary from 5% up to 10%

  15. What kind of interest rates are we talking about? • New Cars vary from 0% up to 8% • Used car loans vary from 5% up to 10% • Remember the better your credit score, the lower your APR will be!

  16. What kind of interest rates are we talking about? • New Cars vary from 0% up to 8% • Used car loans vary from 5% up to 10% • Remember the better your credit score, the lower your APR will be! • A BHPH loan can vary from 12% up to 25%.

  17. Sample Loan Calculation • Here's an example of how the math on your auto loan is done: • If you take out a $15,000 auto loan from your credit union with a 7.5% APR to be repaid over four years, you will owe $362.69 every month. Over a year, those payments would total $4,352,28. Over the life of the loan, you'll end up paying $17,409.12. That's $2,409.12 in interest over the 4 year life of the loan.

  18. Questions to Ask? • 1. What is the APR?

  19. Questions to Ask? • 1. What is the APR? • 2. What is the term? (length of the loan)

  20. Questions to Ask? • 1. What is the APR? • 2. What is the term? (length of the loan) • The longer the loan, the more interest you will pay!

  21. Questions to Ask? • 1. What is the APR? • 2. What is the term? (length of the loan) • 3. Are there any fees associated with the loan? • Is there an early payoff fee?

  22. Questions to Ask? • 1. What is the APR? • 2. What is the term? (length of the loan) • 3. Are there any fees associated with the loan? • Is there an early payoff fee? • 4. Are there any finance charges? (other added fees for getting the loan)

  23. Shop Around • It would be a good idea to get a quote from three different lending institutions before signing a loan.

  24. Buy or Lease • Remember the second you drive a used or new car off of the lot, it begins to depreciate in value.

  25. Buy or Lease • Remember the second you drive a used or new car off of the lot, it begins to depreciate in value. • Some estimates say the new car depreciates 20-30% the minute you drive it off the lot.

  26. Buy or Lease • Remember the second you drive a used or new car off of the lot, it begins to depreciate in value. • Some estimates say the new car depreciates 20-30% the minute you drive it off the lot. • Despite that, and interest rates, buying is still a better option financially speaking

  27. Buy or Lease • Despite that, and interest rates, buying is still a better option financially speaking. • With a lease, you are usually required to make a lump sum payment up front, then monthly payments for the term of your lease.

  28. Buy or Lease • Despite that, and interest rates, buying is still a better option financially speaking. • With a lease, you are usually required to make a lump sum payment up front, then monthly payments for the term of your lease. • Those payments are less than loan payments, but at the end of the lease you have no car to show for it, just a stack of paid bills

  29. Buy or Lease • Those payments are less than loan payments, but at the end of the lease you have no car to show for it, just a stack of paid bills. • The only scenario where it maybe financially feasible, is if you can use your lease as a business write off.

  30. Summary • 1. Go to your bank, get some rough numbers and figure out what you can afford

  31. Summary • 1. Go to your bank, get some rough numbers and figure out what you can afford • 2. Save as much money as you can for a down payment, it will save a lot of interest in the long run

  32. Summary • 1. Go to your bank, get some rough numbers and figure out what you can afford • 2. Save as much money as you can for a down payment, it will save a lot of interest in the long run! • 3. Check out three different loan offers before deciding

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