First Time Financing For Your New Car
It’s a huge milestone in anyone’s life, and after passing your driving test, buying your first car is a rite of passage you’ll always remember. The excitement is huge – from comparing different car models online to visiting dealerships to looking at different paint finishes, there are a lot of details to choose. But before you get carried away with the details of heated seats and private number plates, you need to give an important topic some thought – the financing.
There are many different avenues available to you – dipping into savings, a bank loan or even the different types of financing available through dealership schemes. Finding your way through the various options can be confusing, so make sure you do your homework and weigh up the pros and cons.
Work Out Your Budget
When it comes to working out financing, you should have an idea of your available budget before you begin looking at models and makes. Work out if you need to borrow some or all of the purchase price, and how much you are willing to raise in monthly repayments before comparing quotes for auto loans. Most dealer loans work on a three year basis, so use that as a guide to work out a monthly repayment which will be affordable. It’s important to be realistic and not to overstretch yourself. After all, you still want to be able to drive places and have a social life once you’ve paid for the car!
Make sure your new wheels are affordable. Picture via Creative Commons
Go Shopping For A Loan
With an idea of what you can afford to pay each month, you can then get shopping for finance. Don’t just automatically accept the dealership financing scheme – it may not be the best thing for you. Lenders will usually supply pre-approval for a loan, so you know exactly what you have to spend on a new or used car. Your bank may be able to offer a good rate or a credit union can be a lower-cost form of borrowing. However, sometimes dealers themselves run zero per cent financing on some models, which can be a great way to purchase. Just make sure to compare all available options to ensure you’re getting the best deal you can.
Factor In Hidden Costs
Unfortunately, the costs of car ownership go far beyond what you pay for your new wheels. There are also expenses such as insurance to factor in when thinking about affordability. This can be a huge cost for young drivers, ruling out some sportier models entirely, so make sure you compare car insurance costs for the model you want to buy, and look for policies including telematics, where a black box device installed in your car monitors and feeds back on your driving habits in order to lower the cost of your premium. There are also costs such as fuel, servicing, and repairs to take account of. Make sure that you have planned for these or they can come as a nasty surprise. If things start to look unaffordable, consider looking for schemes from manufacturers where all costs are pre booked and paid for in one lower monthly payment or look at joining a car leasing club if you only need a vehicle for some of the time.
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