Financing


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Updated: 3/28/2003 12:53 pm Published: 3/28/2003 12:53 pm


Financing a vehicle can be an excellent exercise in money management. If you do it properly, obtaining a loan or lease can teach you important budgeting skills. Most people get loans for new cars. Unlike a lease, when you're finished paying off the loan, you own the car. The first step is to determine how much money you can afford to spend on a car. Look at your monthly payments and income, and decide the size car payment you can afford. When you find a car that fits your budget, speak to a credit union or bank to find the best interest rate. This is a good time to make sure your credit report is accurate before the bank looks into it. Also, discuss the time span of the loan and ask if a down payment is required. A large down payment can help reduce the total cost of a car loan, so it's wise to invest the largest down payment you can manage. It's also helpful to pay as much per month as you can possibly budget to keep the length of the loan to a minimum. Here's a good rule of thumb when financing a car: if you can't put at least 20 percent down and finance the vehicle for four years or less, then you should buy a less expensive car. Financing is also available at most car dealerships, but make sure that your financing negotiations do not influence the price of the car. Once you have secured a loan, you pay it back in monthly installments, including the additional interest charges. For more information on financing, contact a financial institution or automobile dealer.-

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