Car Loan Values

The first question that comes to mind when you’re shopping for a car is whether you should buy a new car or a used one. Let’s face it. New cars cost a lot of money. Come to think of it, all cars, used or not, are expensive. And the cost of a set of wheels has become even more pronounced with today’s present economy. Many folks have grown nervous, leading them to decide that it makes a lot better sense to buy a used car over a new one.

When you buy a new car, you spend around $21,000 or more. This is big financial commitment, especially if your income falls in the middle of the income strata. And even at the best of times, it’s a huge leap. How much more when times are hard? Are you still willing to spend that much money on a car?

The Detroit-based Comerica Bank has compiled a report during the third quarter of 2003. According to the Auto Affordability Index, it takes 19.9 weeks of median family income before taxes to buy a new car. This is roughly five month’s worth of salary spent on a car alone. Not a wise choice of spending your hard-earned money, certainly. Spending $21,000 on a car when the economy is slowing and the headlines are filled with job layoffs is not only unwise but foolhardy as well.

But fortune favors the brave, as the saying goes. Many car buyers like yourself who are willing to take the risk can find that there are many car loan value options offered to them. Strangely enough, car loan value in the market is flourishing in these hard times. In fact, million of cars come off lease each year. With this in mind, you can see that your car loan value selection spans tons of good order 2 to 4-year-old vehicles.

Financing your Car Loan Value

Contrary to general perception, when lenders offer finance for your car, they pay more attention to the car loan value than the car itself. The amount of money they charge your for down payment and the loan amount really depends on your car loan value.

Generally, car loan values are lower compared to the purchase price of the car. You can use this piece of information to come up with a rough estimate on what your car loan value is. And once you do, you can compare the car loan value with the purchase price and then come up with another figure, which should be the amount that your lender would charge you for the down payment.

So let’s say that the selling price of the car is $5,000. The car loan value for it should be $4,000. Compare the two figures and estimate the amount of your down payment. This is why in car shopping, knowing what the car loan value is important.

Know your Car Loan Value and save time and trouble

When you know your car loan value, you save yourself a lot of time and trouble. By knowing what the car loan value is, you know what your price range is and you no longer have to go around applying for loans which are well above your means. Aside form that, the car loan value can also keep you from getting short-changed on a car that is less than what you can really afford.