Free Vehicle Finance

Used Car Loan Value And How It Can Impact Your Bottom Line
By Sarah Williams

New cars are an expensive investment. Come to think of it, all
cars are an expensive investment. But new cars are even more
expensive compared to used cars. And with today’s present
economy, lots of nervous folks have come to see the better
sense in buying used cars as opposed to buying a new one.

A new set of wheels could cost you around $21,000 plus.
Already, this is a big financial commitment even in the best of
times. But what about when times are tight? Can you still afford
to spend that much on a car? And is it worth it?

It takes 19.9 weeks of median family income before taxes to buy
a new car. The Auto Affordability Index compiled by
Detroit-based Comerica Bank stated this in their report during
the third quarter of 2003. If you calculate it right, 19.9 is
roughly five month’s worth of salary spent on a car alone. Is
this a wise way of spending our hard-earned money? A lot of
people disagree. It’s simply foolhardy to spend $21,000 on a
car when the economy is slowing and the headlines are filled
with job layoffs.

Fortunately, many car buyers like yourself are afforded many
loan value options which you can take. Loan value for used cars
in the market is flourishing in these hard times strangely
enough. In fact, millions of cars come off lease each year and
that leaves you with tons of 2 to 4-year-old vehicles to choose
from. Not really a bad scene when you think about it. With all
these options, you can certainly take your sweet time when
considering getting loan value for a used car.

Lenders pay attention to Used Car Loan Value

When financing a used car, most lenders you’ll find will only
offer finance for its loan value, instead of the vehicle
itself. Cars are important investments as many of you may have
realized already. So never mind if it’s a used car or a new
car, cars are assets which you can make use of when money is
tight.

The loan value of a used car is generally lower than the
purchase price of the car. But if you know what the loan value
of your used car is, you can compare that to the purchase
price. The result of your comparison should give you a rough
estimate of the amount of money you would have to put down for
your car. As previously stated, lenders pay more attention to
the loan value of your used car than on the vehicle itself.

Used Car Loan Value: Knowing what your loan value is saves you
time and trouble

Knowing what the loan value of your used car is gives you an
estimate of what you need to come up with when you apply for
car loans. Let’s say your dealer sells you a used car for
$5,000. The loan value for that car should be around $4,000.
That leaves you with $1000 if you compare the purchase price
with the loan value. This should be the amount you would have
to play with when negotiating for down payments. By knowing
this, you save yourself from the trouble of applying for auto
loans for a car that is well above your means or not within
your price range. Aside from that, the loan value of your used
car can also keep you from getting short-changed on a car that
is less than what you can really afford.

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