Compare discount financing to a cash rebate if both are offered. "Buy now and we'll give you $500 cash, or provide a 4.8%
loan for four years." Which should you choose? It depends on a lot of factors. If you can afford to buy the car outright,
do it- it's usually the least expensive way to buy a car.
If you take out a loan put as large a down payment on the vehicle as you can manage. And pay as much per month as you can
possibly budget to keep the length of the loan to a minimum. If you can't put at least 20% down and finance the vehicle for
four years or less, then you should buy a less expensive vehicle.
Be aware that there are several ways to lower monthly payments, but only a lower interest rate or a lower amount borrowed
will lower your total interest expense.
If you take out a lengthy loan on a car, refer to the vehicle charts in this book and buy one that will retain a high proportion
of its value. This will shorten the time you are "upside down."
When is an interest rate not an interest rate? When it doesn't include the "hidden" costs of a loan. All interest rates are
not comparable. One rate may include a loan origination fee, and expensive "simple" interest, while another may have no loan
fee and cheaper "compound" interest. APR (Annual Percentage Rate) is a very specific term that factors in any hidden fees
and tells you the rate you will actually pay when all fees are taken into account. It is the "apples-to-apples" comparable
rate. Lenders are required by law to tell you the APR of your loan. You should use this rate, and only this rate, in your
1998 The Complete Car Cost Guide IntelliChoice® Inc. Campbell, CA