Avoid this common car shopping mistake! #carshopping #carbuyingtips #carbuying #carfinance #personalfinancetips #moneysavingtips

Let me show you guys two techniques or tricks that car dealers use to sell you a car, and how you can avoid these tricks and what you should do instead. So let's say that you're buying a $35,000 car, and you're putting about $5,000 down. Now when you're car shopping, the dealership's going to tell you that your monthly payment's going to be about $686 a month. And in most cases, you're going to say, "Hey, I can't afford that payment. I need to be around $550 a month." Well, the dealership's probably going to do one of two things, or perhaps these two things together. So instead of a 60 month loan term, which is what this monthly payment is based on, they might move you out to a 72 month term. And as you can see, that lowers your payment to $591 a month. And if that's not low enough for you, they might move you out to an 84 month term, which brings your payment down to $523 a month. Another thing they might do if you can't afford the monthly payment is ask if you can put more money down. So instead of putting $5,000 down, they may ask you to put $10,000 down. And as you can see, that brings down your monthly payment to about $587, which is closer to your goal of $550 a month. Now instead of allowing the dealer to stretch out your loan term or to increase your down payment in order to reduce the monthly payment, what you need to do is focus on the price of the car and the interest rate. Let me give you an example. So what I recommend is you typically try to negotiate 5 to 10% off of the selling price of the car or the MSRP of the car. And that would bring the price of the car down from $35,000 to $32,500. Now as you can see, my monthly payment has gone down to $633 a month. Now to bring this car payment down even further, we're going to focus on the interest rate. As you can see, this monthly payment is based on a 7% interest rate. But hey, guess what? I know I have tier 1 credit and I know that the manufacturer is currently offering a 1.99% interest rate for 60 months. So let's drop that interest rate to 1.99 and see what happens. Now as you can see, my monthly payment has gone down to $560 a month, which is much closer to my goal of $550 a month. So ladies and gentlemen, don't let the dealership stretch out the loan term and don't let them talk you into putting more money down in order to get to your monthly payment goal. What you need to do is focus on the price of the vehicle and the interest rate that you're paying in order to get to the monthly payment that you need to get to. Financial knowledge is power. Please like and follow for more.