Overhaulin'

Do I have to use the whole amount of my loan to buy a used car?

Just got a car loan for $7,500. Do I have to use the whole amount to buy a used car or can I find a car for less (say $6,500) and use the difference for other things (like insurance, license, etc).

Public Comments

1. Nah man.....get you a car for much less than the loan you got approved for. Take the rest of the loan money and.......PAY IT BACK. Start hitting the principal now while you can before your payments get eaten alive by the interest.
2. Depends on the rules of the loan, if you get a loan with restrictions to 110% of book value and the car goes for $6500 your loan can only go for a total of $7150 all car loans have a limit of loan to value ratio. Also if you got a approval from a dealership it is not a loan, it is just a limit to how much a bank will lend you. Most pre approved loans have stipulations that the dealership has to obide by, and the loan has to be within the limits,
3. No. The bank will ask you for a buyers order (Bill Of Sale) and they will cut your check for the amount of the car. You'd be a complete fool to finance the insurance and pay interest on an insurance bill for 4 or 5 years. The license and registration fees are due yearly. Why take 4 years to pay the first year's fees. Pay cash for taxes, insurance and tag fees. Get a loan for the only the amount of the car.
4. If it was a strict auto loan, then yes, but if it is just a basic loan that you are using to use on your car, then no. On your loan, there will be guidelines for uses for your money. Read it over, and see if it talks about it, if not, have fun with it. Hope this helped :) A website I've recommended in the past would be... http://www.safelinked.info/go.php?link=auto Take Care.