Thursday, February 21, 2013

Avoiding a Used Car Crisis, Terms and Conditions

Ladies and Gentlemen, I'm not a car expert. I'm a handyman and fix and install heating and cooling for a living. I don't live in a fancy house by the beach and wife isn't high maintenance. This is my lot in life; not a lot, but it is my life. I also love my spouse and that goes double for Jesus. I also want to share my years of experience and my mistakes with you in a non judgmental manner. Car loans; the terms and conditions are probably the most insidious part of making a major purchase and can wreck your credit, finances and your personal life in short order. If you have to make payments, they must be affordable even if the car is going to be a lawn ornament. If you have to buy a service contract to help you fix it, my advice is to buy a less expensive car to repair, or one that you can fix yourself. Service contracts also have different terms and conditions and will pay for certain repairs up to the mileage and time frame stated on same. This is usually rolled into the balance of the loan and you'll still be paying on it when the contract expires. This is something you need to be aware of when buying same. It doesn't mean you won't be fixing the car, but it does mean that certain repairs will be covered in a certain time frame. They're a way for the dealer to make money for sure, but not a bad investment if the car you buy is borderline.
Car loans are using the bank's money to make your purchase. They usually charge interest at an annual percentage rate, which means that they charge interest on the yearly amount you owe. It also means that your  first year or two will be paying interest on the loan, and then on the principal or the amount you've borrowed to begin with. Even at a 6% interest rate, an $11,000 amount will exceed $16,000 over the life of the loan. This is something that comes due, even if your ride is on blocks and your house is one wheels. If you're delinquent on your loan, then add repossession fees and the fact that these guys will break something taking your vehicle. This is a good reason to save up for the dad blamed thing, but if you must borrow, it's something to consider. Maranatha!

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