{"id":1153,"date":"2023-08-21T11:55:00","date_gmt":"2023-08-21T15:55:00","guid":{"rendered":"http:\/\/www.dmcccorp.org\/edu\/?p=1153"},"modified":"2023-11-03T11:08:04","modified_gmt":"2023-11-03T15:08:04","slug":"how-can-i-minimize-the-chance-of-being-upside-down-on-a-car-loan","status":"publish","type":"post","link":"https:\/\/www.dmcccorp.org\/edu\/how-can-i-minimize-the-chance-of-being-upside-down-on-a-car-loan\/","title":{"rendered":"How can I minimize the chance of being upside down on a car loan?"},"content":{"rendered":"<p class=\"story-body-text story-content\" style=\"text-align: justify;\" data-para-count=\"248\" data-total-count=\"3858\">When shopping, consider whether you really can afford the model you want to buy. If it\u2019s necessary to take out a six-year loan to afford the monthly payment, it may be wise to choose a less expensive ride.<\/p>\n<p class=\"story-body-text story-content\" style=\"text-align: justify;\" data-para-count=\"248\" data-total-count=\"3858\"><!--more--><\/p>\n<p class=\"story-body-text story-content\" style=\"text-align: justify;\" data-para-count=\"374\" data-total-count=\"4232\">A rule of thumb is 20-4-10: Put at least 20 percent down in the form of cash or a trade-in, finance the car with a loan of no more than four years and make sure the monthly expenses, including the car payment and insurance costs, are no more than 10 percent of your gross income. If you can\u2019t abide by that rule, \u201cthen you can\u2019t afford the car.\u201d<\/p>\n<p data-sourcepos=\"1:1-1:84\">Here are some tips on how to minimize the chance of being upside down in a car loan:<\/p>\n<ul data-sourcepos=\"3:1-3:53\">\n<li data-sourcepos=\"3:1-3:53\"><strong>Make a large down payment.<\/strong>\u00a0The larger your down payment,\u00a0the smaller your loan amount and the less interest you&#8217;ll pay.\u00a0Aim to make a down payment of at least 20% of the purchase price of the car.<\/li>\n<li data-sourcepos=\"4:1-4:112\"><strong>Choose a short loan term.<\/strong>\u00a0A shorter loan term means you&#8217;ll pay off the loan faster and build equity in the car more quickly.\u00a0However,\u00a0it also means higher monthly payments.\u00a0Choose a loan term that you can afford,\u00a0but don&#8217;t go longer than 48 months.<\/li>\n<li data-sourcepos=\"5:1-5:179\"><strong>Get pre-approved for a loan before you start shopping for a car.<\/strong>\u00a0This will give you an idea of how much you can afford to spend and will help you avoid overpaying for a car.<\/li>\n<li data-sourcepos=\"6:1-6:188\"><strong>Shop around for the best interest rate.<\/strong>\u00a0Compare interest rates from multiple lenders before you choose a loan.\u00a0You can use an online loan comparison site to make this process easier.<\/li>\n<li data-sourcepos=\"7:1-7:168\"><strong>Avoid add-ons.<\/strong>\u00a0Add-ons,\u00a0such as extended warranties and service contracts,\u00a0can increase the cost of your car loan.\u00a0Only purchase add-ons that you absolutely need.<\/li>\n<li data-sourcepos=\"8:1-8:31\"><strong>Maintain your car regularly.<\/strong>\u00a0Regular maintenance will help to keep your car in good condition and will make it easier to sell or trade in down the road.<\/li>\n<li data-sourcepos=\"9:1-10:0\"><strong>Refinance your loan if you can get a lower interest rate.<\/strong>\u00a0If your credit score has improved since you took out your loan,\u00a0you may be able to refinance your loan at a lower interest rate.\u00a0This can save you money on your monthly payments and help you to get out of debt faster.<\/li>\n<\/ul>\n<p data-sourcepos=\"11:1-11:302\"><span class=\"animating\">Following these tips can help you minimize the chance of being upside down in your car loan.<\/span><span class=\"animating\"> However,<\/span><span class=\"animating\"> it&#8217;s important to remember that there is always some risk involved in financing a car.<\/span><span class=\"animating\"> If you&#8217;re concerned about being upside down,<\/span><span class=\"animating\"> you may want to consider buying a used car or leasing a car instead.<\/span><\/p>\n<p><em>DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.\u00a0 Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email\u00a0<\/em><a href=\"mailto:contact@dmcconline.org\"><em>contact@dmcconline.org<\/em><\/a><em>.DMCC is located at 1330 SE 4th Ave, Suite F, Fort Lauderdale, FL 33316.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When shopping, consider whether you really can afford the model you want to buy. If it\u2019s necessary to take out a six-year loan to afford the monthly payment, it may be wise to choose a less expensive ride.<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":true,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[12],"tags":[],"class_list":["post-1153","post","type-post","status-publish","format-standard","hentry","category-automobiles"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p5shu1-iB","_links":{"self":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/1153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/comments?post=1153"}],"version-history":[{"count":6,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/1153\/revisions"}],"predecessor-version":[{"id":2023,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/1153\/revisions\/2023"}],"wp:attachment":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/media?parent=1153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/categories?post=1153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/tags?post=1153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}