5 Car Loan Misconceptions | Consumer Reports

Confused about your car loan? You’re not alone In a survey conducted by Instamotor nearly 60% of US car owners don’t understand the relationship between their loan term and interest

Let’s look at five car loan misconceptions Myth number 1, it’s all about the monthly payments [BUZZER] While it must fit into your budget, focusing solely on monthly payments could distract you from the total cost of your vehicle, plus the interest from the loan We recommend using TrueCar or Kelley Blue Book to help compare total car prices, plus loan interest rates from other lenders It’ll give you a better sense of what your dealer is offering

My loan rate is non-negotiable [BUZZER] Unlike loans from the bank, third-party loans arranged by car dealers are often marked up to boost profits, but those rates are negotiable Check with several local banks, credit unions and online lenders such as Clearlane and E-loan to find the best rates Refinancing my car alone is never worth it [BUZZER] Not true

Refinancing can save you hundreds, even thousands of dollars Although interest rates are low, you still may have a relatively high rate if your credit score was low when you took out the loan Refinancing an auto loan is much easier than it is for a mortgage, and most likely you won’t incur any fees I should put down as little as possible so I can use that money for other expenses [BUZZER] No way

The less you put down, the more you’ll add to the loan, leaving you paying higher finance charges A low down-payment could also mean that you’ll end up owing more than the car is worth, which can be a big problem if you need to get rid of the car in a hurry, or if it gets totaled or stolen We recommend putting down at least 20% of the cost of the vehicle When my loan is paid off It will be the perfect time to buy a new car

[BUZZER] Think about it This will be the first time in a while where you’ll no longer have to pay monthly car payments Enjoy it For more on car financing and pricing, check out our build and buy car buying service at CRorg