| It's very important to know exactly how much car you | | | | If your credit is good and the upside down balance isn't |
| can afford to buy. And not only that you need to | | | | too steep, the lending institution may allow you to add |
| know how much car you can afford to buy with | | | | what you owe on your old car into the purchase price |
| payments that last no longer than 60 months. | | | | of your new car. The problem with this is that you |
| Because of the constantly increasing cost of vehicles | | | | didn't pay off your old car soon enough to get out |
| these days, manufacturers and financial institutions are | | | | from underneath it financially, so now you've got a |
| now extending payments to even 72 months. But, 72 | | | | newer car that you stretch the payments out again, |
| months simply isn't a good idea to be on the hook for | | | | plus you've added the balance of your old car into the |
| paying for car for the vast majority of us folks. | | | | cost of your new car. |
| The reason is that a car is a depreciating asset. It is | | | | I would almost guarantee at this point that when you |
| not an investment. The longer you stretch your | | | | try to trade in this car you will be way too far upside |
| payments out over the course of time, the more | | | | down to get financially out of it. That is unless you can |
| depreciation you are actually paying for. | | | | come up with a large sum of cash down that will |
| So, when you're looking to buy a car look for those | | | | cover the negative equity that has been rolled into this |
| that you can pay off in no more than 60 months... | | | | current car. |
| actually the shorter the better. | | | | So even though it may sound great that a dealer tells |
| If you extend your monthly payments beyond the | | | | you they are going to pay off your old car no matter |
| reach of how long you either intend to drive the car, or | | | | what you owe... they just are not doing this. All that |
| how long the car itself lasts, this is where the problems | | | | they are doing is creatively financing your next car and |
| will begin. When this happens and you try to trade this | | | | leaving you buried under a pile of debt. |
| car and you will be what is known in the business as | | | | So the next time you're out looking at buying a car |
| upside down in your car. This means that because you | | | | make sure that you don't finance beyond the market |
| stretch the payments out over such a long time, when | | | | value of the car and make sure you have equity in the |
| it comes time to trade the car in, you will actually owe | | | | car in the form of your trade in or cash, and don't roll |
| more on your loan than the car is actually worth. | | | | any current debt from your old car into your new one. |