Buying a car questions!

[solis88]

Hey everyone I just wanted to know how buying a car through financing works? I wanted to buy a car *with it's options* is worth about 36,000 dollars. This is excluding taxes only. Well, the thing is that I'm thinking of getting a loan through my bank but I'm not sure for how much! The question I have is this: Should I get a loan that only reflects the price of the car without taxes and interest? Or with Taxes without interest? I'm thinking that I should consider the total cost of the car is the price of the car INCLUDING taxes but excluding interest since I'll be paying that to my bank for the next few years. How does that work? I know I'll have more buying power if I walk in with my bank's check than worry about financing with the dealer so I'd like to really be sure what to apply for at my bank before I walk into a dealer without really knowing how it works. Thanks!

[SteveB05]

You need to talk to a financial advisor to really learn simple interest loans...you can really get screwed if you don't know what you are looking at.

Interest is part of the loan, and that is where they (dealer or bank) make their money (if you let the dealer finance the deal, they also make money on the buy rate, but that's another conversation). Most of the time, you'll want to pay dealer fees (finance, not prep), taxes and registration outside of the loan if you have enough to do that and pay the down payment.

Now for the amount, your lender will have a cap on how much you can borrow for a certain car. You really don't want to be close to that as the more you owe now, the more you will owe when it comes time to get rid of it. Try not to ever be upside down (wishful thinking for most of us) which means you owe more than the car is worth.

[nbr1nthuzyst]

couldnt have said it better