Buying a new car costs a lot of money. Now that I think about it, every car is a pricey investment. But compared to used cars, new cars cost even more. And with the way the economy is right now, a lot of worried people have realised that it makes more sense to buy a used car than a new one.
You could spend $21,000 or more on a new set of wheels. Even in the best of times, this is already a big financial commitment. But what if things are tough? Can you still pay that much money for a car? Does it make sense?
A new car costs 19.9 weeks of the average family's income before taxes. In their report for the third quarter of 2003, Comerica Bank in Detroit said this in their Auto Affordability Index. If you do the math right, you can say that 19.9 is about five months' worth of pay for a car alone. Is it smart to spend our hard-earned money this way? Many people don't agree. It's crazy to spend $21,000 on a car when the economy is slowing and people are losing their jobs all over the news.
Many people who buy cars, like you, have a lot of loan value options from which to choose. Even though times are hard, loan value for used cars is doing well on the market. In fact, millions of cars come off lease every year, giving you a huge selection of cars that are 2 to 4 years old. When you think about it, it wasn't such a bad scene. With all these choices, you can take your time thinking about getting a loan value for a used car.
Used Car Loan Value is important to lenders.
Most lenders won't let you borrow money for the car itself if you want to buy a used one. Instead, they'll only lend you money for the car's loan value. As many of you may already know, cars are important investments. So it doesn't matter if you buy a new or used car; both are assets that you can use when money is tight.
Most of the time, the loan value of a used car is less than what it cost to buy. But if you know how much your used car is worth as a loan, you can compare that to the price you paid for it. The result of your comparison should give you a rough idea of how much money you would need to put down on your car. As was already said, the loan value of your used car is more important to lenders than the car itself.
Used Car Loan Value: If you know how much your loan is worth, you can save time and trouble.
If you know what the loan value of your used car is, you can get an idea of how much money you will need to get a car loan. Let's say you buy a used car from your dealer for $5,000. That car should be worth about $4,000 when it comes to a loan. If you compare the purchase price to the loan value, that leaves you with $1000. This should be the amount you can work with when you talk about down payments. By knowing this, you can avoid the trouble of trying to get an auto loan for a car that is way out of your price range or way beyond what you can afford. Aside from that, the loan value of your used car can also keep you from getting a car that costs less than you can afford.
