Watch out! Although your loan payment may not change over the term, your car insurance rates can! I can't stress the importance of affordability. Banks approve your loan based upon current conditions, not the future. Yet, a few speeding tickets can end up costing thousands extra per year in premiums.
Lets look at an example. The unfortunate example is me. ! I have two speeding tickets, opps. It happens. I didn't fight them, I lost points and as a result I faced a significant 50% increase in my premium when I went to buy a new car! The problem is that my high insurance rate doesn't expire anytime soon. I will be stuck at the higher premium for a minimum of two years, if not longer. In addition, my rates can still be raised next year even if I dont' get another ticket! The other big problem is that I run the risk of losing my insurance if I get another ticket. If that happens, I can expect my insurance rates to double, if I could even get insurance at all. This relates closely to your car loan. If your insurance becomes unaffordable you might have to sell your car. With a bad credit car loan at a high rate you might be in a negative equity situation meaning you owe more than the car is worth. To avoid this problem, make sure that you calculate a potential insurance increase into your overall budget.
