Overhaulin'

Can anyone answer a couple car loan (from bank) related questions for me?

First, say I get a $6,000 car loan and put $1,200 dollars down. Let's say it is a 2-year loan and let's also leave out the interest factor for simplicities sake. Will the monthly payments be calculated from the initial loan amount (6000/24=250 per month) or the sum remaining after the down payment (4800/24=200 per month)? Second, I've googled around a bit to find the average car loan length and was a bit surprised to see that it was about 60 months or so. That seems like an awfully long time to me. Though I understand that brand new vehicles are in the tens of thousands. If I was going to take out a car loan for say, $10,000 and put $2,500 down, what length of loan do you think the bank advise I get? Thanks.

Public Comments

1. Much of what you will be paying over and above the loan itself will be in interest. This is determined by your credit score. That being said, any monies used as a down payment is a deduction from the sum that is owed. It is money that you have already paid toward the loan. The down payment will also vary according to your credit rating as well.. As far as the length of the car loan, many different times frames are available to help the buyer fit the payments into their budget. The longer the loan , the less costly the monthly payments will be. It is a double edge sword though. The longer the loan, the more interest you pay. In the end , the car ends up costing you more. We all need to do what we have to, so if a 60 month loan will help you to ensure that you can afford you payments more easily, go for it. You also have the option of sending extra money whenever you can and have them apply that to the principle of the loan , which is just what the car loan is , not the interest. In the long run, this will be helpful for your credit, getting the car paid off sooner and sometimes during the course of the loan they can reduce the interest itself. You just have to keep on top of the bank or lender to see what you are entitled to and when. I hope that this has helped you and good luck!
2. It seems that car loans have been hard to get these days. The online places are easy to check and I have heard the are more flexible. I recommend http://auto.deal4-you.com
3. It is obvious to me that you are searching for a used car. I think that when you start doing your finance shopping, you will learn that most lenders will not finance a used car for longer than 48 months. There can be exceptions, but they usually apply to certified or late model, low mileage vehicles. The most important thing that you need to do is make sure whatever you are buying is affordable for you, monthly, and will last the length of your loan agreement. This is why it is very important for you to have any used vehicle inspected by an independent, certificed mechanic before signing any agreements to purchase a vehicle. Have a detailed conversation with the mechanic about any potential issues and ask for their professional opinion on whether that vehicle is a good investment. It may cost $100 or so, but it will pay for itself in the long run.
4. Here's how I got my used car loan. I went to the bank and told the man how much I had to put down on the loan and the max I could pay a month. He then told me the max I could spend on a car for 2, 3, 4 year loan. He was very helpful. After finding out my limit I then went looking for my car.
5. Financed cars is more expensive to insurance cause it requires full coverage. You can compare how much you would pay for full coverage of this car using this tool - carinsurance.deep-ice.com