Auto Loan Automobile Regrets

Credit is a boon for the cash-strapped. We rely on credit to either save us from debt or to encourage us to get into debt. The latter is the case for cars obtained through auto loans. Maybe even some of us have some auto loan automobile regrets. We could have as easily avoided them had we been more focused on learning more about our auto loan arrangement. Regardless of where we obtained our financing - car lender, broker financing firm, car dealer - it pays to read the fine print.

Regret No. 1 - Fixed Rates Guarantee > car loan arrangements have a fixed APR which means that if a lower interest rate becomes available, you can't take it since you're tied to the earlier rate of your car loan.

Regret No. 2 - Long Loan Period > when the lender computes the loan, they intentionally lower monthly payments so you think the loan is affordable. What they don't emphasize is that the car loan is now over a period of many years (i.e., much longer than the average 5 years). This makes interest payments longer to pay.

Regret No. 3 - Home Equity as Collateral > in desperation, you used your house as collateral to buy an auto. If you can't pay the loan amortization you may lose your house. Think long and hard if you want to risk your family's home to buy a car.

Financing doesn't have to be painful if you know how to choose the right auto loan arrangement.

Written by: Katrina Marion

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