Okay, you’ve wished enough about getting a new car every time you look at your deserted driveway. You must have at least thought once, “Isn’t it possible to get a car with the right financial planning? Or would that be too complicated?”
Well, here’s the thing – the year-end is usually an excellent time to get a car, when manufacturers start adding the upcoming year’s models to the dealers. This is the ideal time to research and plan for this important purchase.
This is where we step in. If you are about to buy your first car, make sure you follow the tips mentioned below.
Decide on Your Budget
Here’s the truth – you might have your eyes set on a particular car, but you’ll not be able to drive it home unless you can pay for it.
So, the best practice is to limit your car spending to no more than 25 percent of your household income. It should include your monthly car loan payments and all other associated expenses like the cost of fuel and insurance premium payments.
Reduce Your Choices
Once you’ve established your budget, you can begin exploring your dream car models.
Visit the official websites of automakers and other independent information websites about cars to evaluate the features you’re looking for.
Take note of MSRPs (Manufacturer’s Suggested Retail Prices) and the invoice price. Make sure to also look for local inventory lists to find out what’s available in your region.
Find Out How Much It Will Cost
Unless you plan to open a car showroom for yourself, we are sure your new car won’t sit idle in your garage. You will drive it for miles, and it will lead to expenses, including repair, maintenance, insurance, and fuel.
So, do your fuel calculation according to the miles you drive each year, and based on that, request an auto insurance quote for your car, which would apply to all the drivers in your family.
You must provide your auto-insurance company with your car’s exact details, including model, the trim level, engine type, and specific occasional add-ons for a precise insurance estimate.
Make Sure You Lock In Your Financing before You Go to the Dealer
This is important.
Dealers don’t just sell cars, they also coordinate the auto loan and they receive commission or a flat fee for the loans they arrange.
So, instead of letting your dealer handle the loan for you, take a look at auto loan rates at various banks and request a pre-approved loan before going to the dealer.
Note that having a pre-approved loan does not mean you must take that deal. If you have good credit, the dealer may offer a fantastic deal.
The current pandemic has shaken the auto industry, and many manufacturers are offering zero-percent financing offers. Yet, it is crucial to remember that even a zero-interest rate may not be the best option. It’s better to get a cash rebate from your automaker and then get finance with a bank. You can also consider getting a car loan from an auto loans credit union.
Look For Discounts
Check if the dealer is offering any cash-back incentives. The incentives should be taken into consideration after you have negotiated the price.
Keep in mind that many automakers provide discounts for military members or even members of specific credit unions, which can be stacked and paired with cash-back incentives. Check the official websites to find such incentives.
Bargain Hard (And we MEAN it!)
This is where your research can help save more.
Moreover, if you’re looking to buy a new car, do not think about selling your old car if that’s a part of your plans. It is better to bargain the price of your new car as well as the trade-in value of your previous vehicle in separate discussions.
Do some research on the value of your car online to know if you’re being offered an acceptable deal.
Final Word
Long story short, buying a car on a budget is possible through proper research and financial planning.
One last thing, before signing the final contract, check the details carefully and ensure that you’re not paying unnecessary fees. Also, make sure that you get the verbal agreement documented in writing.
Go, get your dream car!
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