There are many aspects to consider when purchasing a vehicle, and finding a car you can afford is one of the most important ones.
In these uncertain times, a bad financial decision can negatively affect your life and your credit score. In order to get it right the first time, car-dealer network motus.cars shares five tips to consider before buying a car:
Review your budget
Before you start researching the latest models and test-driving vehicles, you first need to figure out how you’ll pay for your new car. You have to ask yourself:
1. How much money have I saved up for a deposit?
2. Which financial institution is offering me best interest rate?
3. What fees and licensing costs will I have to pay?
Look at your recent bank statement and monthly bills to determine your budget. If this is not your first car, add the trade-in value of your current vehicle to this budget — you can use this to make a larger deposit that will lower your monthly payment and interest.
Remember that the cost of purchasing a vehicle is more than just the price of the car itself. There might be additional expenses such as the registration fee or add-ons you might want, such as an extended warranty. This is on top of the monthly running costs such as fuel and insurance.
Determine your wants and needs
Once you have figured out how much you can comfortably spend on your car, you then have it to assess what you need and want from your car. Make a list of non-negotiables such as vehicle size, safety features, and fuel economy to determine what kind of vehicle will best satisfy your needs. Then list everything you want but do not necessarily need, like technology, colour preference, convenience, and style. Keep this list in mind when researching specific models.
Do your research
Once you know what you need, you can now choose the exact brand and model that best meets your requirements. It’s helpful to compare listings online to find vehicles that come with your specifications. Take a look at new, used, and demo options before deciding what will be best for you. Afterwards, take your top two or three choices for a test drive. Pay attention to the car’s acceleration, comfort, and handling. This is also a great time to ask any questions you may have about the engineering or functionality of the vehicle.
Consider ongoing costs
Once you have found one or two cars you love, and you’re almost ready to make your decision. But before you sign the paperwork, make sure you will be able to afford the ongoing costs. For example, some models have parts that cost more to repair, which means your maintenance costs will be higher. Others are not so efficient on fuel, which will cost you more every time you fill up, and some have a higher insurance price tag. Make sure you can afford the car you choose throughout its lifetime.
Financing your car
If you don’t have cash to buy your car then you need to approach a financial institution to finance your purchase. Get quotes from different banks to see which one will offer you the best interest rate. Try and choose a short-term repayment plan with the lowest interest rate possible. Be wary of balloon payments as they can make repayments seem small, but could leave you still owing quite a sizeable amount on your car by the end of your term. Try to make as big a deposit as you can (ideally anything from 10% to 20% of the purchase price), as this will help lower your monthly instalments.