How to Get a Car Loan (The Right Way)

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so if you want to get a car loan without

getting totally screwed then watch this

video because I'm gonna teach you

exactly how to get a car loan the right

way financing a car is a big deal

because if you don't do it the right way

you're gonna lose a ton of money and

you're probably gonna end up going

upside down in your car now I bought my

first car when I was 20 years old and I

was so stupid because I got a $20,000

loan for seven years at seventeen

percent interest so please don't do what

I did because I didn't do any research

and I took a really bad advice for my

friends on how to grow my credit and we

all know that bad advice will always

lead to really stupid decisions

now I'm Jason with the honest finance

Channel and I make a lot of videos on

different financial topics so if you are

interested in this type of content feel

free to subscribe to the channel or at

least give this video a like and now on

to the content that you've been waiting

for now I'll start by saying that

financing a car is basically broken into

three different parts but you've got to

understand how these different parts

work in order to not get screwed as the

consumer we'll be looking at the amount

borrowed the interest rate and the

length of the loan those are the three

different parts that you need to

understand these three different numbers

will determine what you can or can't

afford as a monthly car payment so pay

attention and just remember that a

monthly payment doesn't determine what

you can actually afford until you apply

what I'm talking about now starting with

the amount borrowed this will be your

entire car purchase plus any taxes and

fees and any money that's left from a

previous car loan it's basically

everything you need to borrow from the

bank in order to purchase your car now

make sure to do the research on the car

that you're buying so that you can get

the best deal possible and please don't

pay full price for extended warranties

or carpet cleaning anything like that

because those prices are all negotiable

just remember to get the best price

possible on your car purchase and feel

free and watching my car buying

negotiation video if you need help in

this area now as far as the interest

rate goes this is just the amount of

money that you have to pay back the bank

in order to even have your car loan now

in order to get the best interest rates

you've got to have excellent credit or

you've got to have a cosigner that has

excellent credit in order to make it

happen and if you are using a cosigner

make damn sure that you can make your

monthly payments every single month

because if you're late just once you're

gonna hurt their credit score and trust

me they're gonna be pretty pissed when

they go in to get a loan and they

realize that you screwed their credit

score the bottom line here though is

that if you do have bad credit just

stick with the cheap car so that you can

actually make the payments and build

your credit along the way or you could

pay cash and save up like we used to

back in the day you'll also want to have

a down payment of about 10 to 20 percent

to get the best rates and new cars will

typically need about 20 percent down

because of their fast depreciation I

know that 20% down is a lot but you've

got to understand that in order to get

the best rates you got to make a few

sacrifices if you have an existing car

that you can sell just take those

profits and use those towards your down

payment and you'll probably have enough

now if you don't have very much down you

can at least see what the banks will

give you because it's worth a try the

best car loan interest rates are

typically about 3 to 5 percent which

will cost you about 30 to 50 bucks a

year per thousand dollars that you

borrow so if you're financing $20,000

then you're gonna be looking at about

600 to $1,000 a year in interest but

that's on optimal credit and with a good

downpayment and if you are given a rate

that's higher than 5% then I would

highly suggest working on your credit

score or paying cash for the car so that

you don't go completely upside down on

it being upside down in your car means

that you owe more than the car is

actually worth and that is not a good


cars naturally depreciate on their own

which totally sucks but it is normal but

just keep in mind that you don't want to

be paying a ton in interest because you

will go upside down in your car now when

you decide to finance a car I would

stick with just banks and credit unions

because they always have the best rates

just shop around online and I'm sure

that you'll find a bank really quick and

easy and please don't go with your local

bank just because you know who they are

because that doesn't always mean that

they're gonna have the best rates just

always go with whomever has the best

terms because that's gonna save you the

most money on your car loan now as an

example I live in Utah and I actually

financed a car once through a company

Canada because they had the best rates

and it was easy to just pay online

dealers can also get you really good

rates on car loans but just make sure

that they don't get a cut of the

interest rates and if they're not taking

a cut and go ahead and use them because

it's a lot easier and you probably only

have to get your credit for at once and

sometimes car manufacturers will even

offer their own rates which are

typically really good from about 2% to

0% on new car purchases so if you're

looking into a new car and they offer 0%

financing and there's nothing funny

about it

then that is a seriously good deal now

if you've made it this far into the

video please give it a thumbs up to help

me out because it's always much


Thanks and finally let's cover the

length of the loan which is the amount

of time that you're gonna be making

monthly payments until the loan is paid


just remember this the longer the length

of the loan the smaller your car

payments are going to be but just

remember that the longer the loan is the

more that you're gonna pay an interest

and this is what you have to understand

you have to understand this because

banks and dealers will just increase the

length of your loan in order to get your

payment's where you want them so that

you think you're getting a good deal the

monthly payment is only important if

you're following the three parts that

I've been talking about now the length

of the car loan should only be about 24

to 60 months if you go with anything

that's longer than the 60 months you're

gonna see the interest rates increase

and you're guaranteed to waste way too

much money on your car typically the

interest rates will go up about one to

two points for every year you extend

past sixty months and that's also for

the customers with the best credit score

so please don't do anything higher than

five years so let's say that you buy a

car for fifteen thousand dollars at a

four percent interest rate for 60 months

your monthly payment is gonna be about

three hundred bucks a month for the next

five years and you're gonna pay almost

sixteen hundred bucks in interest over

the life of the loan now let's pretend

that we buy the same 15 thousand dollar

car but this time you're gonna pay eight

percent interest over eighty four months

your payments now gonna be two hundred

and thirty three dollars a month which

is better than the two seventy six but

this is all a lie because you're gonna

pay a ton more an interest you'll now be

paying about forty six hundred dollars

in interest for the car loan and you'll

be paying on it for the next seven years

so now can you see why having a longer


is a bad idea it's all a big fat lie

because your monthly payment might look

good on paper but it's actually a total

ripoff and after just a couple years I

guarantee you you're gonna be upside

down in your car and you'll still have

five years to go on the loan did you

know that the average car loan is 68

months long at 4.2 percent interest for

$30,000 borrowed those are really scary

numbers because it proves that most of

us are buying way too much car now I

want to make a quick note here about car

insurance before you go out and buy a

car please call your car insurance to

find out how much the new car is gonna

cost you because if you're looking into

some fancy 7 Series BMW and it costs you

a hundred and fifty bucks more a month

in insurance and it's probably worth

looking into something else so just call

your insurance before you buy a car so

that you know how much more it's gonna

cost and now after all of this

information you know how to finance a

car just make sure to get the best price

for the car the best interest rate and

make sure that you're only keeping a

loan for 24 to 60 months and if you

follow these three parts correctly I

guarantee you you're gonna get the best

financing possible for your car loan I'm

Jason with the honest finance channel

feel free to watch any of my other car

videos if you're interested in this type

of content or at least give this video a

like that's all