There’s nothing more exciting than buying your first car. Although the experience of purchasing your first car can be thrilling, it’s relatively easy to make a mistake, especially when you aren’t careful.
While it’s okay to learn from your mistakes, the mistake you make while buying a car can be very expensive. You don’t have to be a newbie to make a mistake while purchasing a car; even car owners can sometimes fall into these traps. And before you consider financing for a car loan, here are five tips on how to buy your car the smart way.
Work Within Your Budget
It’s always recommended to purchase a product within your budget, and a car is no different. The mistake most buyers make is spending their credit cards or borrowing a high amount to own the best or latest cars they can purchase. Besides your car loan, you’ll need to factor in the cost of maintenance, registration, fuel, taxes, and insurance, which will add to the cost of owning a car.
Instead of spending a huge part of your income to purchase a car, you should consider spending only 15% of your take-home pay. Calculate the cost of owning a car and set a realistic budget that’ll allow you to purchase a car smartly. Therefore, before making a final decision, you’ll need to assess your budget and ensure that the total cost, including loan payment, doesn’t exceed 20% of your take-home pay.
Mark Your Priorities
The smart way of purchasing a car is to look for one that best suits your needs. You should come up with priorities and check if a particular car meets your expectations before purchasing it.
When noting down your priorities, maintenance should be in your list. A relatively easy-to-maintain car will keep you off a mechanic’s shop, which translates to less costs in terms of your money and time.
Essentially, every priority depends on your lifestyle. Things such as the number of passengers, gas or electric mileage, and cargo space are down to your preference.
When creating a list of priorities, you might want to start with must-have aspects. These features are those that you can’t do without in a car.
The sensible recommendation is to stay away from flashy cars, especially if it’s not within your budget. Every dollar counts when it comes to purchasing a car, so you should settle for car features that are within your budget.
Test Drive
Once you’ve come across a car within your budget and offers all the features you need, you should consider taking it for a test drive. Before making a final decision, you should take the car for an extensive drive test. While test driving, pay attention to visibility, seating position, and engine sound.
If something isn’t right about that particular car, you should look for a better choice. Don’t be afraid to be picky, as you want the best car that will suit your needs. This is a vital aspect you’ll need to consider when purchasing a car smartly.
Avoid Purchasing Add-ons At A Dealership
When purchasing a car from a dealership, they’ll try selling you all sorts of things, including tire protection plans, extended warranties, gap insurance, and a paint protection plan. Unfortunately, most of these items are overpriced, and most individuals have no idea how to determine a fair price.
It’s hard to tell the exact price of add-ons; however, car dealerships tend to make a lot of cash from them. So you might want to say no to these add-ons irrespective of what the salesperson tells you. With car prices being relatively high, the last thing you’d want is to purchase these add-ons from dealerships at extra cost. Always look for cheaper deals somewhere else or stay without one, as you’ll not need some of these add-ons.
Take Note Of Long-term Car Loans
Car loans are evolving; nowadays, you can find six- to seven-year car loans. These types of loans are considered dangerous. You should stay away from any type of car loan that’s longer than five years. A long-term car loan means you’ll lower your monthly payment; however, it also means you’ll be paying more in interest as they offer high-interest rates.
If you can’t afford the long-term car loan and want to sell the car, you’ll probably get stuck owning more debt than your car’s value. When buying a new car, consider going for a five-year loan. When purchasing a second-hand or used car, you should work with a three-year car loan. These loans make it easier to resell your car without owning much as well as settle your loan as their interest rates aren’t too high.
Takeaway
You don’t want to spend too much time and money buying your next car. The tips discussed in this article can help you buy your car the smart way. The last thing you’d want to do is overspend when purchasing one. This is a vital aspect you’ll need to consider, as purchasing a car nowadays has become intimidating due to spikes in car prices, interest rates, and fuel prices.
