Posted on December 17, 2009 by jia zhou

Here is the habit of most consumers I see in the past years. Hypothetically, you are out there to look for a new car, or a used car, whatever new or used, you might need a vehicle for yourself, to work, to do the grocery shopping. You might not have enough money for the car you are interesting in, but there is always loan, money from the bank to help you out. So, you won’t have to be empty – handed out of the dealer. Is that something wrong? Yeah, definitely, they seems to help you out from the desperate situation, but they might just get you in debt.

You go to the dealer, you check your wallet, zero dollar available. The bank said, “No problem sir.” We just grant you however much you need to borrow. You might have to pay us back in 5 to 6 years of period of time. You are more than glad to take this offer. You just have to think about it. From the moment you drive the car out of the lot, the value of the car is depreciated over time. And your interest plus the principal of your loan will keep on getting on you. The gap is you pay for higher price for what the car actually worth.

My personal suggestion, why not saving some of your money, like at least 30 to 40 percent of the car’s value. Then you can borrow the rest of it. So, you won’t have to pay higher interest.