How to stay within your budget when buying a car
Before thinking about a new car, spend the time to ask yourself why do you need it. This means putting aside all of your subjective opinions and questioning yourself objectively before heading to the nearest used car lot. Then, set a strict budget for yourself, and try your best to never overspend on things you do not need..
Most people often opt to finance their next car. Certainly, you have to pay interest and you will end up paying more than you would’ve buying the car immediately, but financing helps make those purchases with small payments every month and removing the need for you to give a way a large sum of money that often you don’t have right away.
Calculating the total amount of money spent over the installment period seems tricky, but there are plenty of free online calculators that will make your life easier or reach out to us to know the monthly payment on a specific vehicle you might be interested. Refer to most financial institutions, and people often recommend that you should only spend around 15 percent of your monthly income on your monthly car payments.
Following that, financing a car isn’t all that black and white. There’s something known as down payment which is a lump sum that is paid upfront prior to calculating your total car interest. You’re essentially paying part of the amount to reduce what you need to borrow, which in turn help to reduce the total amount you pay over the pay period. In many cases, the option for zero down-payment loans is also available.
Your credit score will also impact your final interest rate. Making too many inquiries over a short period of time can mildly negatively impact your credit though. If you have a laudable credit score and you’re making a big down payment this acts a strong leverage for you to negotiate better rates.
Instead of making a down payment, it might be a worthy thought to consider trading in your current car. A tired old econobox might not trade for much, but it helps avert the headache of getting rid of your current car or the hassle to sell it privately. It’s easier to get dealers to take your car if you’re also making a purchase. Before you drive your car in though, it’ll help to get a dealer appraisal before hand so you know what to expect. Our dealer offer appraisals in case you are interested.
Finally, you should definitely think about the amount of money you need to spend to keep your new car on the road. This is where diligent research pays its due. Scrutinize before making the purchase to avoid ending up with something you won’t be able to maintain, specially parts and insurance. Consider including a used car warranty.
The importance of budgeting for your car purchase can’t be overlooked. Bringing a level-headed relative or friend can help ease your decision-making process as well. If you’re intrigued by the idea of a certified pre-owned car, be sure to give our dealership a look.