Ford Motor Company (F), General Motors Company (GM), Honda Motor Co Ltd (ADR) (HMC) and The Dumbest Way to Buy a New Car

But Ford Motor Company (NYSE:F)’s offer goes only with loans of up to 60 months. If you need longer-term financing, you may well end up paying a much higher interest rate, and combined with having to pay interest for a longer period of time, the result could be thousands of dollars in wasted money as a result of your needing lower monthly payments.

3. You’ll strain your credit for other purchases.
Having an auto loan on the books may make it harder for you to get credit for other purposes, such as buying a home or getting a credit card. Even if you make payments on time, your monthly payment will sap available income to support other loan payments. That can leave you in the uncomfortable position of having your car keep you out of the home of your dreams.

The smarter move
As tough as it is to defer gratification, waiting until you can make a big down payment or settling for a less expensive vehicle to qualify for affordable short-term financing is the better way to buy a new car. Otherwise, you could end up digging yourself into a debt hole you’ll have trouble ever getting out of.

The article The Dumbest Way to Buy a New Car originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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