As soon as you decide to borrow money to pay for your car, declare war on the new loan. Ask your lender if it is possible for you to borrow the entire amount you plan to finance into two loans. Tell him the first one will be a ninety-day, interest-only loan for the entire amount of the automobile. Put his mind at ease if he questions your ability to pay off the entire amount in that short length of time.
Tell him that the first loan is to allow you time for your “down payment blitz.” Promise him you will refinance the lower balance into a monthly payment plan at the end of ninety days.
Now, you may still be asking, “Why in the world would I want a ninety day interest only loan?” The reason is simple; this ninety-day period will allow you time to add as much cash as you can to your down payment.
During this period you should work as much overtime as possible and have a garage sale. This is a time to sale as much unnecessary assets in order to gather as much cash as possible for the down payment. This can be a special time when the whole family gets involved in a ninety-day down payment marathon.
Why if everyone in the whole family pitches in, you may be able to lower the amount you have to finance by as much as one third or even half.
Pay down the note as quickly as possible.
Any additional down payment money you earn during this time should be paid to the bank the day you get it in hand. The quicker you repay the ninety-day loan, the lower your interest cost will be on that loan. At the end of ninety-days, refinance the remaining balance for the shortest length of time possible.
Please keep in mind that these suggestions are subject to the approval of the lender. Before this debt reduction plan will work, you need the cooperation of as many of those who are involved with the purchase as possible.