so when it comes to car loans i want to give you guys a real life example here and this has to do
with me and that's because the very first car that i ever bought i ended up with a 17 interest rate
and i financed it for 72 months which is six years and then on top of that i also paid almost full
retail for the entire car and i bought all the extended warranties and all of that added stuff
which made the car a complete rip-off and that's why i'm here today to tell you that car loans are
only worth it if you follow a few specific things and that's what we're going to be going over now
i am not opposed to getting car loans or paying cash for your cars but what i am saying is if you
are going to get a car loan i want you to do it the right way so that you can end up spending as
little money as possible on interest and different fees so that you end up better in the long run so
with that being said we are going to be going over the three most important things that you can do
to make sure that your car loan is worth it rather than something that's a complete rip off
so the first thing that i want to mention when it comes to getting a car loan and making sure that
it's worth it is just the fact that you have to be getting the best deal possible on the car and
i know this sounds simple but this has to do with the financing it also has to do with the price of
the car because at the end of the day if you buy a bunch of extended warranties you get a really
bad interest rate and you pay a lot for that car all of that money is going into that loan so if
you paid 25 000 for the car but you really could have paid 20 then that is a big deal
because that's five thousand dollars more that you're financing that you don't have to
now i am not going to elaborate much when it comes to buying a car because there's a ton of
different nuts and bolts involved when it comes to getting the best price possible but if i were
to give you one piece of advice what i would say here is that you have to be doing your research
on the car that you're buying because i don't care if you're in love with the car it doesn't matter
you have to look up the car on different sources online and find out exactly how much that car is
worth so that you know if you're in a ballpark range that's a good price or a bad price that way
you at least have somewhere to start so if you end up walking around the dealership and you find the
perfect car that you want to buy you test drive it everything's perfect then the one thing i'm always
going to recommend here is that you compare it to what other people have paid for that exact same
car so you have to look up the make the model the miles the different trim level everything
that's specific to that car so that you know apples to apples what other people are paying
for that specific car and then you have a good starting point of where to negotiate now if you do
want to know more about buying a new car or a used car or just negotiating a car deal then i will
leave a playlist at the end of this video that you guys can watch to help you further find out
more information on those specific topics because i've made a ton of different car buying videos
and a lot of them should be able to help you now the next thing that you have to pay attention to
when it comes to your car loan being worth it or not is the actual interest rate that you get on
the car loan because a lot of the times you might go into a dealer and you might get a rate of 12
percent for the car but you really could have qualified for like a six or seven percent rate
through your local credit union so you really want to know ahead of time what type of a rate
you're actually going to qualify for and that is really important when it comes to buying your car
so what i would recommend you do before you go out and buy a car is to get pre-qualified
from a local credit union because they're always going to have the most competitive rates so what
you do by getting pre-qualified is you actually get pre-qualified for a set amount of money so
let's say that your budget really can only handle about an eighteen thousand dollar car well then
what i would do is get pre-qualified for twenty thousand dollars that way you're on the high end
and then you don't have to renegotiate anything so if your car comes in right around nineteen 000
ish then you're just fine and you're already pre-qualified at that predetermined rate and
if you do already have a car loan and you feel like your rate is probably a little bit too high
then it doesn't hurt to just go into your local credit union and find out if you can refinance
your car because a lot of the time you'll find out if you've been making your payments on time
and your credit's gone up then you're probably going to end up with a better rate and a better
term than what you originally signed up for and that is always a good thing because i just want
you saving money here and another thing i want to add here is that you need to pay attention to your
credit score because this is one of the biggest contributing factors to the rate that you're going
to get as far as an interest rate goes on your car loan so if you go through the dealer or through a
credit union they are going to be checking your credit and you need to have optimal credit in
order to get the best rates because that's just the way it is now if you're not sure what your
credit score is you can always just hop on google and type in free credit report and you'll find a
lot of different reputable companies out there that can check the three different bureaus so
you can actually see what your credit score is and it will also tell you what's good and what's bad
with your score so that you can start to work on it now if you do run your credit report and your
credit score is low because of something that you don't feel is accurate then you can always report
those problems to the bureau so that you can get them fixed and then also you're going to find the
obvious problems with your credit score as well so for instance if you did make some late payments
and you're aware of that and it's true then you're just gonna have to give those time and
you're gonna have to make sure that you make your payments on time every single month so that your
score can start to go up again and if you don't feel like you have enough time to fix your credit
score before you need to buy a car then what you can do is you can get a co-signer on the loan so
that you can use their credit as the better credit so that you can get a better rate on your loan
but just be really careful here because if you do end up making some late payments or anything like
that those dings are going to end up on both of your credit reports so be very careful here
and wise because i don't want you doing anything foolish so just make sure that you're getting
the most competitive interest rate out there and then obviously make sure that your credit score
is in check because that is going to be a big contributing factor to the rate that you're going
to end up getting now the next thing that makes a car loan worth it or not is the obvious truth of
if you can afford the car or if you can't now i have a really basic strategy here that you
guys can follow along with this is going to help you determine if you can afford a car
or not and it's just based on some simple mathematics and please don't take this as
the only advice out there because when it comes to buying a car you might have a lot of debt at home
and i don't know all of those numbers so these are just very basic equations that most of us can put
in that way we can get a ballpark of what we can afford and obviously what we can't so as far as
car affordability goes there's just three steps that you need to follow here and the first step
is the fact that you cannot have your loan go longer than 60 months i would highly recommend
that you do between 24 and 48 months but if push comes to shove 60 months is the longest that i
want you going now the second step here is that you need 20 down on your car and i know that this
is a lot of money but as far as this equation goes this means that you can afford the car
because i don't want you going upside down in it which means that you owe more than it's worth so
20 down is the next step now the third step this is the one that has to do with your own income
and this step is that you don't pay more than ten percent of your take-home pay
so meaning the money that you're getting after taxes so if you make six thousand dollars a month
then the car that you should be buying should have a six hundred dollar monthly payment according
to the other steps that you're also following now keep in mind this also should include maintenance
and registration different things like that so really if you're making six thousand dollars
a month you should probably have a five hundred dollar car payment and then a hundred dollars-ish
for the extra stuff that's involved in owning the car as well so just make sure that you get
the best deal on the car that you can make sure that you get the best interest rate and obviously
pay attention to your credit score and then make sure that you can actually afford the car because
like i've said in a lot of different videos your payment isn't the only thing that matters here the
payment can be misconstrued because they can make the loan longer and make your payments smaller and
that's not what you want here you want to get the best value for your car loan now if you do want to
watch some other car buying videos i'll leave them right over here so that you guys can watch them
and if you just happen to find this channel i'm jason with honest finance and i make a lot of
videos on different topics that will give your life and your finances more value so feel free
to subscribe if you guys are into this content but thank you for watching and have a great day