New Car Auto Finance Scams

They say a new car saves you more money in the end than buying a used one. Why? It’s because it hasn’t had time to depreciate yet, auto finance companies prefer to extend loans on cars that have a high value and easily agree to long-term amortization arrangements. All of it’s true, especially when they say new car buyers must agree to the terms of 84 month auto loans.

What’s the catch? Loans that take 7 years to pay for brand-new cars almost always equals a higher APR (annual percentage rate) that is normally fixed for the entire duration of the loan period. This means that higher-valued cars mean higher monthly amortization payments. Think about it - you’ll be tied for 84 months to a fixed APR financing scheme when the value of your car already starts to go down the minute you drive it from the dealer.

It’s best to buy cars, especially new ones, when you can afford to pay in cash. If you are not careful, loans and financing can be a real debt-trap; you think you’re paying a low amortization each month but adding all that up equals more than you bargained for. Auto financing, in general, is not for everyone. Be careful in choosing a loan arrangement if you must get a loan. Also, used cars aren’t necessarily a bad idea – if you’re thorough and patient when you inspect an auto, you may be surprised at the fine bargain you’ll get in the end.

Written by: Katrina Marion

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