By: Raymond James
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.
Driving gives you freedom, it’s such a nice feeling to drive a car you own. However, owning a car may not be easy because of the upfront financial investment you have to put in. That’s why we’ve prepared this guide on how you can own your dream car, without breaking the bank.
1. Be Informed
Car dealerships are often associated with trying to convince you to buy a car you’ve never heard of, however they can help you understand the features and benefits of each make and model before you settle on your decision. You can also read review websites online to learn more about the vehicle such as whether it’s safe and reliable. A vehicle may look good on paper only for it to start giving you problems after you purchase it. Doing this research will also help you find the best price and value for your potential new ride.
2. Consider Financing Options
It might not be wise to spend all your life savings on a vehicle, instead consider an easy car loan as a funding option and alternative to buy your personal vehicle.
Before applying for a car loan, it might be worth checking your credit score to check your credit history and get an idea of the amount you could qualify for. Next, work on getting preapproved for a loan which will put you in a better position to negotiate the price at the dealership or privately.
3. Compare Prices
When you’re pre-approved for a loan, you will have a rough idea of how much the bank is willing to give you. However, don’t settle on the first price you find online or at the dealership. The car-selling business has slim margins and is often competitive which means you’ll always find a car dealer ready to sell you a vehicle at a lower price.
It’s worth checking the websites of multiple dealerships in your local area to compare prices. If your local dealership doesn’t have a website, make an in-person visit, sometimes it’s better to talk to the dealer face-to-face to allow room for more negotiations and test drive cars that might not be on their website yet.
4. Don’t Overspend
A fundamental question to ask yourself is, why do you want to own a car? If it’s your first car, you may be more interested in convenience so that you can go wherever you want. However, it’s not worth buying a car to impress your family and friends.
If you go down this route, you may end up buying a car that you can’t afford. At the time, the monthly payments at the dealership may look favorable, but if you calculate the total amount, you’ll discover that it may be too expensive for a vehicle that isn’t serving you any value. After a few months, you may be unable to keep up with the payments and the car will be repossessed, lowering your credit score in the process.
5. Buying New versus Used
New cars may be more attractive than used cars due to their lower mileage and new features. It may give you satisfaction buying a car knowing you’re the first one to drive it, however the downside is that new cars are pricier and lose value quicker than used cars. It’s estimated that a new car can lose as much as 50% of its value once you drive it out of the dealership!
Alternatively, used cars are less expensive and more reliable as they’ve been driven and tested on the road before. The main disadvantage of buying used cars may be underlying mechanical issues as you can never really know why someone wants to sell their car, either due to an upgrade or because they’re experiencing constant mechanical issues.
Before you buy your vehicle, consider both options to see which one best fits your needs.
6. Know All Costs
There are some people that buy cars only to sell them after a few months, doing so because the car becomes too expensive to maintain. If you want to own your car and have peace of mind, know all the associated costs beforehand. This includes finding out how much you will pay for insurance premiums as this is often the most overlooked cost of purchasing a car. To counter this, make sure you get quotes from different insurers and compare them.
7. Take A Test Drive
Don’t pay for the car without test driving it, you have to know how the car feels on the road. Is it enjoyable to drive? Is the vehicle comfortable? Test drive the vehicle so that you can be certain of the purchase and the value it will bring to you and your lifestyle.
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