Automobile Financing Mistake

Break free from the sight of a non-running car in Green, Fairlawn, or Cuyahoga Falls—call our buyer of scrap cars. Escape from the clutches of a junky car in Medina, Springfield Township, or Kenmore—make the call to the buyer of scrap vehicles! Why leave that old car sitting there in North Akron, Sharon Center, or Mogadore—get cash for cars today! It is better to cut your loses with that non-running car in Stow, Monroe Falls, or East Akron—receive fast cash for a junk car.

A recent NYT article by Ann Cairns tells us the following: “Many people who trade in their vehicle when buying a new one are upside down, which means they owe more on the existing auto loan than the vehicle is worth, the auto website Edmunds.com reports. Edmunds says that 32% of trade-ins for these purchases in the 1st 9-months of the year had equity that was negative.  The average negative equity was roughly $4,800 at the time, which is quite high. About a 25% of shoppers buying pre-owned cars also had negative equity, averaging $3,600.

Owing more than the car is worth is like to being “underwater” on a mortgage, in that the asset behind the debt is not worth the loan. Assume you owe $20,000 on a vehicle now valued at $18K. This truly means that you have negative equity balance of $2,000. If you were to trade in your car, the debt from the old loan must be rolled into a new one. It will then take a while to have any equity in this new loan, which means you could get behind in a vicious cycle of loans with negative equity.

Consider if you can truly afford the vehicle you want to buy. If necessary, to extend the loan to 6-years, it may be better to choose a less expensive car. A rule of thumb is “20-4-10”: 20% down, finance the car with a loan terms of not more than 4 years, and make sure the monthly bills, which includes the car payment, insurance etc. aren’t over 10% of your total gross income. If you can’t make it within those parameters–then don’t buy it.

Take more than one short test drive before deciding on a car to limit the chance of buying an unsuitable vehicle that you’ll want to trade in during the initial period of the loan. For example, a tall buyer may want to think twice about a subcompact car. He was really too cramped driving that vehicle. The full article is available here: http://www.elpasoinc.com/news/top_story/article_0846ba8a-b588-11e6-a4d9-5b7ee43a1177.html

Summit County Buyer of Scrap Cars

Best practices are in place throughout Silver Lake, Wadsworth, and Kent, by our buyer of scrap cars. Follow the conventional school of thought for vehicle disposal in New Franklin, Firestone Park, and Highland Square—call our buyer of scrap vehicles. There is no reason for further delay in Copley, Barberton, or Ravenna—get cash for cars today. At last, your neighbors no longer have to look at your junky vehicle in the Merriman Valley, Bath, and Lakemore-you got cash for a junk car!