Trading in your old car can go some way to reducing the total cost of your new vehicle purchase. It will also mean larger monthly payments, and an extension to the overall life of the loan. However, it is important to remember that “zero down” means you will be paying more in the long run in interest fees. Many auto dealers offer financing with no down payments as an incentive to get customers in the door. A substantial down payment will give you more flexibility in determining the life of your auto loan, and the size of your monthly payments. The larger the initial down payment, the more manageable your auto loan will be. The first thing to consider when shopping for a new car, is to decide how much money you can devote to the down payment. Calculating your monthly payments before signing a loan agreement can help you to prepare for the financial road ahead, and avoid much of the financial stress that can accompany a major investment like a new automobile. But balancing the cost of an automobile against projected income can be difficult, and it is important to know what you can afford to pay every month for the next three to five years. For most people, buying a vehicle will require an auto loan, and that means committing to a schedule of monthly payments over an extended period of time.
Even the seemingly cheaper priced used cars can also come with a significant maintenance cost.
Few people can afford to buy a new vehicle on a whim, and ideally, when someone is shopping for a new car they expect it to provide reliable transportation for years to come. Buying a new or used car can be a major investment, often second only to buying a house.
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