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New vs Used Car Rates

• New cars: Typically 4-8% APR with good credit
• Used cars: Usually 1-3% higher than new car rates
• CPO: Often better rates than regular used
• Credit unions often have the best rates

The 20/4/10 Rule

A guideline for affordable car buying:

• 20% down payment
• 4 year (48 month) maximum loan term
• 10% or less of gross income for total car costs

Avoiding Negative Equity

Cars depreciate 20-30% in the first year. Long loans (72-84 months) often result in owing more than the car is worth. Protect yourself by:

• Making a substantial down payment
• Choosing a shorter loan term
• Buying a car that holds value well
• Considering gap insurance

Total Cost of Ownership

The sticker price is just the beginning. Also budget for:

• Insurance (can vary greatly by model)
• Fuel costs
• Maintenance and repairs
• Registration and taxes
• Depreciation

Negotiation Tips

• Get pre-approved before going to the dealer
• Negotiate on the out-the-door price, not monthly payment
• Shop at end of month/quarter for better deals
• Be prepared to walk away