When it’s time to make a new vehicle purchase, there’s a lot to consider. But the number one thing you should be thinking about is your finances.
To paraphrase Suze Orman, when it comes to buying a car, plenty of people aren’t making the smartest choices.
Buying a new vehicle can be a drain on your wallet. To avoid this, you want to choose a vehicle that works with your finances, not against them.
Here’s how to make a smarter vehicle purchase that keeps both you – and your finances – happy:
1. Don’t go long term.
The number one mistake many car shoppers make is choosing a long repayment term. Some dealers even offer terms of 72 or 84 months – that means you’d be paying off your car for six or seven years. If the warranty is up and you’re still paying for your car, something’s wrong.
In general, pick the shortest repayment term that you can afford. Don’t go longer just because it’s offered – you’ll end up paying even more in interest.
2. Secure financing first.
The second most common mistake car shoppers make is falling in love with a vehicle they can’t afford and buying it anyway. While this may seem like a romantic way of doing things, it’s definitely not the most financially savvy.
You’re better off securing your car loan financing before even setting foot on the lot. Determine what you can afford to spend and then look for cars that fit that budget – not the other way around.
3. Buy, don’t lease.
Leasing can seem like a more affordable alternative than buying a car. It usually comes with lower monthly payments, repairs are covered, and you don’t need to worry about selling it. But the downside is that you are always paying for your car. You are never “paid off.” It’s similar to choosing a long-term repayment schedule.
4. New isn’t always best.
When you’re shopping for a new car, don’t forget that new-to-you cars can be just as good – or better. Look for a reputable car dealership (like Prudent Value Cars!) that offers vehicles with lower mileage and rigorously tests for safety.
You’ll likely spend less overall on your vehicle than if you buy new and you’ll be getting a car that lasts the same amount of time.
5. Know your credit score.
Similar to securing your financing first, know your credit score before you do so. Especially if you have bad credit, some dealers may try to take advantage by telling you that your score is lower than it actually is, so they can trick you into taking out a higher-interest loan.
Avoid this by checking your credit score before you start shopping.
6. Avoid scams.
Credit score scams aren’t the only tricks some dealers play. Check out our recent blog about bad credit car loan scams to be on the alert for: https://www.prudentfinancial.net/bad-credit-car-loans-blog/
7. Look for deals when possible.
The time of year you shop can make a difference. For instance, some dealerships might run seasonal promotions, or even have periods where all vehicles on the lot come with interest-free loans. If you’re already in the market, take advantage of these when you can.
8. Be disloyal.
You may have a certain brand of vehicle you prefer for its name or clout. But this can cause some shoppers to spend more than is realistic. When you’re purchasing a car think about all the associated costs – gasoline costs, costs to repair (some foreign vehicles cost more to repair in Canada), and more.
Even if you know that you like a brand, take some time to shop around and compare other vehicles – you might just find one you like better that is more affordable.
At Prudent Value Cars, we can help you make the best vehicle decision for your family and your finances.
Contact us today. Call 1-888-852-7647 or visit www.prudentvaluecars.com.