Buying a car involves three major aspects – understanding the kind of car you want to buy, monthly payments you can afford and terms of the lender if you take a loan to finance your car. All three aspects are connected with each other in that the right car for you is not solely based on its utility, but also its affordability. Conversely, an affordable car need not be right for you in terms of its utility.
Similarly, a car that appears affordable initially, may not turn out to be so when you talk to banks and find out about the costs associated with the loan. Here are a few useful tips that will make the process easier.
Raise Part of the Cost Through Your Old Car
If you have an old car, you may want to exchange it for a new one. You will be able to use the money from the sale to partly finance your new car.
Set a Ceiling for Car Price
The next step to financing your car is to set a maximum amount that you are willing to pay for your car. This will help you eliminate car options that don’t fit in your budget. Next, research on prices and features of cars from various manufacturers. This way, you will be able to compare costs and understand which car will suit your needs better.
Loan shopping and loan pre approvals
Once you’ve decided on the car you want to purchase, look for car financing options. It is important to find a company that lends money on terms favorable to you. Talk to a few lenders before you decide on one of them for an auto loan. Getting a pre approved loan for purchasing your car is a good step as car sellers will have more confidence in you as a borrower.
Explore the Option to Lease
If you plan to buy a car and use it for less than two to three years, then leasing may be a better option. This is because leasing a car involves making lesser monthly payments than when you purchase one through a loan. When you compare car leasing with car purchasing, take into consideration a few factors – the time frame for which you want to keep the car, monthly payments you can afford, and the down payment that you’ll have to make.