Car Loans: What You Need to Know

New, used or lease?

A car’s value drops by 15–20% the moment you leave the lot. Buying used, with the blessing of a good mechanic or a Carfax report, is often a better financial decision. Leasing only makes sense when you have significant disposable income.

Know the total costs.

Don’t go to a dealer before you check Edmunds or Kelley Blue Book for a price. If you’re buying, you’ll put 10–20% down, and pay interest on the balance. Add your insurance, gas, and maintenance estimates to get your total. The good news is, you’re already covering some of these costs today. Using a financial calculator makes it easy to see your auto-related spending by automatically categorizing those expenses across all of your accounts. Subtract this amount from your total cost and that’s how much you’ll need for your new car.

Know what you can afford.

Got enough for the down payment and fees? Great. If not, use a budget planner widget (like one on mint.com) so you can start saving.

Get the lowest price*.

Information is power -- so get some, and negotiate. Identify likely maintenance and repair issues using Consumer Reports so you can ask pointed questions. Know your credit score and get a pre-approved loan so you can compare financing costs.

*Don't forget about cPort's FREE Auto Buying Service!

http://www.mint.com/solutions/car/