There are so many issues to consider when buying a new car, from what make and model to choose, to what engine size is best, but a key consideration has to be how you will finance the purchase of your car and its ongoing maintenance.
Before you commit to buying a new car and decide how you are going to finance it, the key question that you need to ask yourself is what do I need this car for? Compile a list of essential requirements. For instance, is room for the family an essential requirement, or is fuel efficiency your main consideration? Is the car going to be used primarily for shorter, urban journeys, or is it going to be used for longer trips such as a daily commute? These are practical considerations, certainly, but when you think about it, they also feed into the issue of how you will finance the purchase and on-going running of your car. For example, fuel efficiency is going to be a key consideration if you do a long commute. In any case, you want you to get the right car because it is an expensive commitment, financially; getting the wrong car can be a costly mistake.
Once you have decided on what car to buy, financing its purchase becomes your focus. For most of us, buying a car for cash only is not an option, so some type of external financing will have to be used. Ensure that you have at least some of the purchase price saved for in the form of a deposit that can be used as a down payment. A down payment can lower your repayments significantly and save you big money in the long term.
Even if you have sufficient funds to cover the outright purchase of a car, it would be a big mistake to pay for it using your credit card. Remember that interest rates on credit cards are higher than the interest rates offered on auto loans, and so the purchase of a car on credit card would cost you significantly more and perhaps more than you could afford, even if your bank balance is healthy.
Your credit history will also be taken into account when calculating how much you can afford to repay, and if you are suitable for a loan or finance package at all, so keep your credit score healthy. Pay your bills on time and avoid getting into serious debt. In terms of how much you can afford to borrow for a car, ensure that you have accurately calculated your essential living expenses and have those accounted for before determining how much you can afford to repay each month.
You may be tempted to think that the actual purchase price of your car is the only issue that arises in terms of financing it, but that would be to overlook other key considerations. These include insurance costs, fuel costs, and servicing costs. Bigger is not always better, and you may find that choosing a smaller model saves you money on all three of these fronts.
In terms of where to buy your new car, getting the best car dealer can make all the difference. A reliable and professional car dealer can offer you a number of extras that may well save you money over the long term. For instance, your car dealer may be able to provide you with an extended warranty on your new car or offer an after-sales deal on servicing and maintenance.
The sale of new cars is a competitive business, so be sure to shop around dealers and see which one is offering the best package for you. Aside from after-sales car servicing, dealers sometimes offer such extras as upgraded in-car features – leather seats or a better sound system being just two examples – that instantly improve the resale value of your vehicle. Of course, one of the biggest advantages of using a car dealer is that they offer a number of finance options, including their own. If you are using an external finance company, it is important to remember that finance companies consider the prices offered by dealers to be a fair reflection of the value of a vehicle, thus impacting on the interest rate and terms and conditions of any loan that you obtain.
To summarize, financing a new car means going beyond how much money you have to finance its initial purchase and needs to include careful consideration of how much it is going to cost you to keep it on the road.