Most research done on a car involves the Make, Model and reliability of the car. We occasionally get hung up on the color, the engine type and whether to buy new or used. After making our decision and doing all that research we go searching for our perfect car with only two objectives in mind-lowest price and the best interest rate.
Even if you were to get a car loan at just 8.5% APR, 18% of your car payments go towards interest. When you consider the number of car you will purchase over your life time, that’s a lot of money flowing away from you and your family. Let’s assume you’ll buy a new car every 4 years for the next 44 years, so 11 cars in total. Each car will be financed for $10,550 and you get an interest rate at 8.5% for 48 months. You have a choice with how to pay for these cars. There are really only 5 ways to pay for a vehicle: You can buy them through a bank or financing company, lease them with a contract, pay cash for them, use an interest savings account, like a CD or use your 101 Plan Insurance Policy. Let’s look at each method in further detail. Buying a car through a bank at 8.5% interest, would cost $260 per month, which is $3,120 per year, over 44 years that amounts to $137,280.