Buying your own car is not just a big decision but also a significant milestone in your life. It signifies your financial freedom and can fill you with a strong sense of self-esteem. However, it is also a decision that may dent your savings account. Moreover, the salesperson may convince to buy a feature-loaded higher-end model. To ensure that your car purchase doesn’t disturb your financial health, here are a few aspects that you can consider.
Choose cash or financing
Before you head over to the showroom to finalize your purchase, it may be a good idea to decide the mode of payment. Of course, financing your car is going to cost you more because of the interest rate. However, it is not advisable to pay for your car in cash if it will leave you with no money in your emergency fund. You may even consider paying a portion with your credit card if you can repay it timely. For instance, if you have a bonus coming in the next month, you can use your credit cards and earn some reward points.
Plan your down payment
If you don’t think you can pay for your car in cash, you have the option of financing your car. However, it is always better to do your homework before you make your decision. Try to find out if you are eligible for auto loans and their rates of interest. It will also help to figure out the down payment that you will have to pay. If it doesn’t suit your pocket, you may have to settle for a cheaper car for now.
Check your credit score
Most customers who apply for a bank loan consider the interest rates to be fixed. However, most banks are willing to negotiate their rates for reliable customers. Banks always prefer customers who have a good credit score to reduce their risks. You may check your credit score to understand your negotiating power.
Finalize your budget
Buying a car is not like shopping for clothes or footwear. You can afford to go overboard in the latter case but not in a car. To avoid any unpleasant future scenarios, now may be a good time to plan your car budget. If you wish to avail of a loan, you may also want to plan your monthly payments. You can use an online calculator to get a ballpark figure that you will be required to give every month. This exercise will help you with a deeper understanding of what you can afford.
Research the models
Instead of relying solely on the salesperson’s advice, it is a good idea to do your own research before you visit the showroom. To begin with, write down your needs. Do you need the car only for in-city travel or would you also take it for adventure trips? Would you prefer a classic sedan or a sporty SUV? Answering such questions will help you with clarity on your needs. You may also ask around your friends and family for their recommendations. If not, you can always ask your gold old friend, google.
Shop around at dealerships
Before you proceed with the payments, make it a point to check the prices with at least a couple of dealerships. You can even ask them to send you the pricing details so that you can understand any hidden costs. There are several websites that operate in this area and compare the car prices at dealerships. Some of these help you in getting quotes from dealers. Once you have this information, you will be in a better position to negotiate. At times, dealers run discount schemes, and it may be worth a shot to call and enquire about such offers.
Selling or trading-in
Now that you are planning to buy a new car, it is also the right time to think about your older one. Are you going to sell it in the open market or simply trade it in at the dealership? The second option may seem better as it is easy and smooth. However, most dealerships will offer you much less for a trade-in. Again, it is a better idea to do some research and perhaps, even get a few offers to get the best deal.