Other Options
An alternative to getting a car loan through a bank is a loan through the dealership where you buy your car. Car
dealerships have their own financing department and their loans are similar to bank loans. It’s a good idea to bring an adult with you to help you understand the loan terms, ask the right questions and make sure you’re getting a
good interest rate and not overpaying for the car. Sometimes it’s better to walk away and think about the decision before you make it.
Car loans are common. As long as you make your monthly payments on time and don’t fall behind, you’ll pay off the loan within five years and build your credit in the process. That’s a good deal!
Personal Finance Stories Becca was excited to buy her first car. She’d been driving her old family car through high school, which was fine (and free), but after getting her first real job, she felt like it was time to buy a “grown-up car.” She knew she could comfortably afford about $250 per month and wanted to keep her car insurance affordable, so she decided to get a pre-owned car that was one or two years old. Using her bank’s mobile app, she filled out the used car loan application and was surprised to discover that within a few minutes she was pre-approved. The loan company emailed her the pre-approval letter the next day, and she and her dad headed to the dealership that weekend. They looked at a variety of cars until she found one she loved. The dealership had a “no haggle” price policy, which meant that she had to pay the sticker price - there was no room to negotiate. She handed the dealership her letter, signed a few documents, and drove off the lot that same day. Becca has added the $250 cost to her monthly budget and uses her mobile app to make automatic payments.
Adulting 101: A Guide to Personal Finance | 49
