It can cost about 21,000 dollars or more for a car. This is a lot of money even when times aren't so troubled. Can you presently afford that much? The Auto Affordability Index set up by Comerica Bank in Detroit figured that in the third quarter of 2003, it took almost 20 weeks of an average family's income before taxes to buy a car. That is about five months of income on a car. In this economy, is that worth it?

Considering the above, you can see why so many people are now considering the used car option. In this market there is a growth of loan value choices available for used cars. Millions of cars come off their lease every year, so there are plenty of four to two year old cars available to choose from when you are shopping for a used car.

Lenders use Used Car Loan Value to Finance the Car

Cars are considered investments no matter whether they are used or new. However, most lenders will finance a used car based on its loan value rather than vehicle. This is generally lower that the actual cost of the car. If you take the purchase price minus the loan value of the car, you will get an idea of how much down payment you would need.

Know your Used Car Loan Value Before you Shop

If you know the loan value of a car, you can figure out how much you need to come up with to pay for your car loans. If you buy a car from a dealer for 5000 dollars, the loan value is about 4000 dollars. You would be negotiating with the dealers about the down payment of 1000 dollars. This calculation also helps you stay within budget. For every car you look at you can figure out the cost of the down payment and you won't be going out of your price range. With a loan value less than the cost of the car you have a little more of a safety net as well.

So knowing the used car loan value of the car before you negotiate, will help you get a better deal, plus you won't be surprised at the amount of down payment required and be caught off guard.

The better prepared you are when it comes to making the deal on your car purchase, the more likely you will be able to negotiate the price you want to pay for your used car. Determining the used car loan value is one thing you can do in order to prepare.