A Quick Example Here is some information that demonstrates how easy it is to get confused about a car loan... Let's say you have found the car of your dreams and you have negotiated a purchase price of $20,000. You have also been told that you can obtain a loan for the car at the current best interest rate of 6%. Finally, you have budgeted to have a car payment of no more than $400 per month and you would like to have the loan for only 3 years. So take a quick look at this table...
** Although you negotiated a price of $20,000 for the car, because you are taking out a loan, the total of all the payments over the life of the loan is the "actual" price you pay for the car. If you can only afford a maximum of $400 per month for a car payment, you can not purchase the car with a 3 year loan. But, this is where the dealer will "help you out" and tell you that he can get your payment down to $386.66. You are thrilled because you came in cheaper for the monthly payment than your budget! There are only two problems: 1 - You will have to make payments on the car for a total of 5 years (2 more years than you planned) AND 2 - You will pay almost $1,300 more for the car. So was it such a good deal?
That really depends on
These are the types of things you will learn from the book
to help you make the best decision for YOUR individual circumstances. |