Finance Questions

Archive for October, 2006

Question: With no Prior Credit History, am I able to finance for a new car?

I'm turning 18 in August, and I understand I have no credit, my question is: Am I able to finance for a brand new car? And how could I get financing for a new car.

Answer: Likely you could, if you put 20% down on the car.

You can get financing from most dealerships, but they'll try to rip you off - with interest rates between 12 and 28%, if they think they can get it. So go to your bank first, and ask them how much they'd give you a loan for, and how much down they'd require.

Also, keep in mind - if your car is less than 4 years old, you'll be paying TOP DOLLAR for insurance on it - with a spotless driving record, depending on the model, you could EASILY be paying $3,000 to $4,000 a year just for the car insurance.

Honestly, it's SMARTER to save up for six months, and pay $5,000 for a 5-6 year old car, which will cost you about HALF to insure. Rich people don't drive new cars - poor, heavily in debt people drive new cars. Rich people are too smart to invest in depreciating assets.

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