so if you want to get a car loan without
getting totally screwed then watch this
video because I'm gonna teach you
exactly how to get a car loan the right
way financing a car is a big deal
because if you don't do it the right way
you're gonna lose a ton of money and
you're probably gonna end up going
upside down in your car now I bought my
first car when I was 20 years old and I
was so stupid because I got a $20,000
loan for seven years at seventeen
percent interest so please don't do what
I did because I didn't do any research
and I took a really bad advice for my
friends on how to grow my credit and we
all know that bad advice will always
lead to really stupid decisions
now I'm Jason with the honest finance
Channel and I make a lot of videos on
different financial topics so if you are
interested in this type of content feel
free to subscribe to the channel or at
least give this video a like and now on
to the content that you've been waiting
for now I'll start by saying that
financing a car is basically broken into
three different parts but you've got to
understand how these different parts
work in order to not get screwed as the
consumer we'll be looking at the amount
borrowed the interest rate and the
length of the loan those are the three
different parts that you need to
understand these three different numbers
will determine what you can or can't
afford as a monthly car payment so pay
attention and just remember that a
monthly payment doesn't determine what
you can actually afford until you apply
what I'm talking about now starting with
the amount borrowed this will be your
entire car purchase plus any taxes and
fees and any money that's left from a
previous car loan it's basically
everything you need to borrow from the
bank in order to purchase your car now
make sure to do the research on the car
that you're buying so that you can get
the best deal possible and please don't
pay full price for extended warranties
or carpet cleaning anything like that
because those prices are all negotiable
just remember to get the best price
possible on your car purchase and feel
free and watching my car buying
negotiation video if you need help in
this area now as far as the interest
rate goes this is just the amount of
money that you have to pay back the bank
in order to even have your car loan now
in order to get the best interest rates
you've got to have excellent credit or
you've got to have a cosigner that has
excellent credit in order to make it
happen and if you are using a cosigner
make damn sure that you can make your
monthly payments every single month
because if you're late just once you're
gonna hurt their credit score and trust
me they're gonna be pretty pissed when
they go in to get a loan and they
realize that you screwed their credit
score the bottom line here though is
that if you do have bad credit just
stick with the cheap car so that you can
actually make the payments and build
your credit along the way or you could
pay cash and save up like we used to
back in the day you'll also want to have
a down payment of about 10 to 20 percent
to get the best rates and new cars will
typically need about 20 percent down
because of their fast depreciation I
know that 20% down is a lot but you've
got to understand that in order to get
the best rates you got to make a few
sacrifices if you have an existing car
that you can sell just take those
profits and use those towards your down
payment and you'll probably have enough
now if you don't have very much down you
can at least see what the banks will
give you because it's worth a try the
best car loan interest rates are
typically about 3 to 5 percent which
will cost you about 30 to 50 bucks a
year per thousand dollars that you
borrow so if you're financing $20,000
then you're gonna be looking at about
600 to $1,000 a year in interest but
that's on optimal credit and with a good
downpayment and if you are given a rate
that's higher than 5% then I would
highly suggest working on your credit
score or paying cash for the car so that
you don't go completely upside down on
it being upside down in your car means
that you owe more than the car is
actually worth and that is not a good
thing
cars naturally depreciate on their own
which totally sucks but it is normal but
just keep in mind that you don't want to
be paying a ton in interest because you
will go upside down in your car now when
you decide to finance a car I would
stick with just banks and credit unions
because they always have the best rates
just shop around online and I'm sure
that you'll find a bank really quick and
easy and please don't go with your local
bank just because you know who they are
because that doesn't always mean that
they're gonna have the best rates just
always go with whomever has the best
terms because that's gonna save you the
most money on your car loan now as an
example I live in Utah and I actually
financed a car once through a company
Canada because they had the best rates
and it was easy to just pay online
dealers can also get you really good
rates on car loans but just make sure
that they don't get a cut of the
interest rates and if they're not taking
a cut and go ahead and use them because
it's a lot easier and you probably only
have to get your credit for at once and
sometimes car manufacturers will even
offer their own rates which are
typically really good from about 2% to
0% on new car purchases so if you're
looking into a new car and they offer 0%
financing and there's nothing funny
about it
then that is a seriously good deal now
if you've made it this far into the
video please give it a thumbs up to help
me out because it's always much
appreciated
Thanks and finally let's cover the
length of the loan which is the amount
of time that you're gonna be making
monthly payments until the loan is paid
off
just remember this the longer the length
of the loan the smaller your car
payments are going to be but just
remember that the longer the loan is the
more that you're gonna pay an interest
and this is what you have to understand
you have to understand this because
banks and dealers will just increase the
length of your loan in order to get your
payment's where you want them so that
you think you're getting a good deal the
monthly payment is only important if
you're following the three parts that
I've been talking about now the length
of the car loan should only be about 24
to 60 months if you go with anything
that's longer than the 60 months you're
gonna see the interest rates increase
and you're guaranteed to waste way too
much money on your car typically the
interest rates will go up about one to
two points for every year you extend
past sixty months and that's also for
the customers with the best credit score
so please don't do anything higher than
five years so let's say that you buy a
car for fifteen thousand dollars at a
four percent interest rate for 60 months
your monthly payment is gonna be about
three hundred bucks a month for the next
five years and you're gonna pay almost
sixteen hundred bucks in interest over
the life of the loan now let's pretend
that we buy the same 15 thousand dollar
car but this time you're gonna pay eight
percent interest over eighty four months
your payments now gonna be two hundred
and thirty three dollars a month which
is better than the two seventy six but
this is all a lie because you're gonna
pay a ton more an interest you'll now be
paying about forty six hundred dollars
in interest for the car loan and you'll
be paying on it for the next seven years
so now can you see why having a longer
low
is a bad idea it's all a big fat lie
because your monthly payment might look
good on paper but it's actually a total
ripoff and after just a couple years I
guarantee you you're gonna be upside
down in your car and you'll still have
five years to go on the loan did you
know that the average car loan is 68
months long at 4.2 percent interest for
$30,000 borrowed those are really scary
numbers because it proves that most of
us are buying way too much car now I
want to make a quick note here about car
insurance before you go out and buy a
car please call your car insurance to
find out how much the new car is gonna
cost you because if you're looking into
some fancy 7 Series BMW and it costs you
a hundred and fifty bucks more a month
in insurance and it's probably worth
looking into something else so just call
your insurance before you buy a car so
that you know how much more it's gonna
cost and now after all of this
information you know how to finance a
car just make sure to get the best price
for the car the best interest rate and
make sure that you're only keeping a
loan for 24 to 60 months and if you
follow these three parts correctly I
guarantee you you're gonna get the best
financing possible for your car loan I'm
Jason with the honest finance channel
feel free to watch any of my other car
videos if you're interested in this type
of content or at least give this video a
like that's all
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