Need to consider before buying a new carby Deep Bhatt Live your life with Entertainment
When you are buying your first car, you might spend hours researching different makes, models, dealerships, and even colors of your potential vehicle.
But if you plan to borrow money to buy new car, it's just as important to look around at financing options and take the proper legal steps to become a car owner. Taking a big-picture view of how to buy a car will allow you to drive off the lot with your dream first car and your finances intact.
Determine How Much You Can Afford:
The first thing you should do is determine whether you can comfortably take on a new loan now or need to save more for a down payment. Saving can also reduce the amount you need to borrow for a car.
If you have the financial stability to get a car loan, determine how much you are willing to spend on the car based on how much you can afford to pay each month.
Determine how much you can afford to borrow:
Add up your monthly income. Include wages and any self-employed income.
Add up living expenses. Include fixed expenses that don't change (rent and utilities, for example) and variable expenses that do change, such as food, entertainment, and emergency expenses.
Add the costs of ownership. Include the cost of auto insurance, registration, and maintenance costs.
Factor in what you would get for trading in a vehicle. If you owe more on the loan than its market value, you may want to pay the debt first to avoid rolling the old loan into a new loan and living with higher interest rates and monthly payments as a result.
Subtract all costs from your income. Your monthly car loan payment should be less than the resulting figure.
Keeping your budget top of mind is one of the most important tips for how to buy a car within your means. Don't get swept away by the excitement of getting your first car; this strategy will help you avoid overextending yourself financially and getting deep into debt when buying a car.
Shop for a Lender
Naturally, how much you can afford to spend on your first car will determine what type of car you decide to purchase. So, once you've established your budget, begin looking for a loan.
You can secure financing from one of two sources:
Direct lender: This is a bank, credit union, or other financial company from which you secure a car loan directly. You may be able to get a better deal from a direct lender.3 Many direct lenders will not guarantee a rate until you sign the papers, but they will give you pre-approval for a loan amount and the current rate. You may be able to negotiate better financing terms once you get to the dealership if you get preapproved beforehand.
Dealership: This is a business authorized to sell cars. You will enter into a financing contract with the dealership, but it will outsource the contract to a direct lender. Getting financing from a dealership allows you to skip a separate visit to a lender and may offer multiple financing options and incentive programs.
Don't automatically go through your local dealer for financing. To start, contact several banks or credit unions and ask about the interest rate, loan term, and any borrowing limits.
Look for a Car
Now that you've established your budget and secured funding, it's time to start looking for a car. Decide whether you want a new or used car and what make, model, and features you want. You will likely experience fewer problems and more years of use with new cars, but they cost more and depreciate quickly. A used car may be a better bargain, but be prepared for more repairs and a shorter useful life.
Then, shop at dealerships or online sources or look into a private sale through the classifieds. Take new or used cars for a test drive in different road conditions. While it's always wise to have a used car inspected by an independent mechanic before you buy it, even if the dealership has certified its condition, this step is even more crucial if you opt to get a car from a private seller. A good mechanic can tell if the car has been in an accident, has been totaled, or if there are any other major problems with it.
If you go with a private seller, also obtain the car's service record and ensure that the seller owns it (the title and registration should be in their name) and that there are no liens against it.
Created on Feb 20th 2020 07:01. Viewed 136 times.