Budget or Emotion- Which Should You go for when Buying a Car ?

what car can i afford with my salary
By John Hayden

As with many other purchases we make, emotions tend to come into play when deciding which car to buy.

Picture this: you walk into a dealership, and you immediately see one particular automobile that is precisely the type you like. The color is your favorite, and it’s just the right size for your family. You even begin to imagine yourself driving it already. When you discover that the price of the car is above your budget, you still want to buy it because you have fallen in love with it.

Your budget is supposed to be paramount in making car purchase decisions, not how appealing the car is to you. It would be best if you also wanted to know the gas mileage and the cost of maintenance of the vehicle you want to buy because some cars are more expensive to find their parts. Then, you will be able to make the right decision of which car to buy based on all the factors stated.

Here, we shall be looking at how you can stick to your budget when that expensive car is tempting, and avoid common pitfalls of car shoppers.

Figure out your budget

Most people go out looking for their dream car before they think about how to acquire it. That is not financially wise because you are very likely to spend far beyond your means. The appropriate thing to do first when thinking of purchasing a new car is to determine how much money you can pay for it. This involves:

  • Knowing what your current car’s worth when you trade it in.
  • Assessing how much you can afford to pay each month.
  • Finding out if there is a need for a down payment and how much it will be.
  • There may be the need to go shopping around to do this, and the objectives are to find dealerships with the best interest rate and most value of a trade-in for your current automobile not to sample your dream car.

Look beyond the price tag

The overall cost of an automobile is not merely the sticker price. It includes all expenses incurred on using the car over its lifetime. So in your car purchase decision, there are other costs you want to put into consideration. Some of them are:

  • Interest rates: Look for dealerships offering the lowest interest rate. Some dealerships even offer zero-interest financing deals at certain times of the year.
  • Gas mileage: Some vehicles can travel farther than others on the same fuel quantity. Typically, bigger cars burn more fuel than small ones in moving the same distance. This means that bigger cars will cost you more on fuel expenses, and you should keep that in mind when making a decision.
  • Maintenance costs: You may also want to know the maintenance cost (such as cost of replacement parts) of the car you are about to purchase because it costs more to maintain some cars than others.
  • Length of warranty: This also affects the overall costs you will incur on the car. So you would want to get a car with a longer warranty.

Registration fees and dealer costs: Find out if there are hidden fees or dealership charges.
Value over time: Some cars depreciate faster than others. So if you plan to trade-in later, you might want to go for a car that depreciates a bit slowly so that it will still have a good value by the time you are trading it in.

Long or short term car loan?

When financing your car purchase, one important decision is whether to get a long term loan or a short one. Although more people are going for long term car loans in recent times, mainly because car dealerships/lenders present such financing options as more convenient, most of such loans will cost you more in the long run. It’s worse if you are paying a high-interest rate, and you have to pay it for as long as 96 months (an equivalent of 8 years), as is prevalent today. That way, you will still be paying for your car for a long time after its warranty has expired!

It often costs less to pay back a short term loan of about three-to-four years with a fair interest rate. If you can afford it, you can even go for a shorter term. However, if you must use a long term loan, ensure that all you will be paying remains within your budget.

When you have finally made up your mind on how much you want to spend on getting your new car, go to the car lot and look only for cars with prices that fall within your budget. Do not be tempted to check out those that are more expensive, no matter how beautiful or stylish you find them to be. Choose safety over aesthetics and elegance.

Also, if you don’t think you can handle it, get a certified specialist to help with that. Our experts will be glad to be of assistance during the entire process. Our joy is seeing the smiles on the faces of our clients as they get their dream leases and cars. Get one of our experts assigned to you by filling the form below.

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