Personal Homework Before Car Shopping
Is your car falling apart? Does your car not “work” for you anymore? Is your car damaged beyond repair? Then it looks like you should probably do some car shopping so you can buy a new car, but do you know what to do?
Car shopping can be overwhelming, especially if you are only getting your information from a salesman at a dealership. If you don’t know what it is you want or need, someone else’s agenda can quickly become your own and you could wind up in something that doesn’t satisfy your needs. One of the first things a smart shopper should consider is their budget, credit, and all of the expenses that a car purchase will affect each month.
Your budget and financial situation is probably the number one deciding factor on the shopping process. Do you have enough money to buy a car or will you need to finance or lease a car? How much can you afford on a monthly car payment? How much can you afford in monthly car insurance? How much can you afford in gas every month? Each of these questions are factors when setting a car budget.
If you want to avoid a car payment and want to buy a car outright, your car shopping process is a lot more limited, and that can be a great thing. You know how much you can spend, so you don’t even need to waste your time searching for cars priced outside your budget. Just don’t forget to add in the cost of taxes, tag and title in your purchase.
If you will be financing or leasing a car, you need to consider the amount of money you have for a down payment and how much you can afford for a car payment, car insurance and gas every month.
If you don’t have a trade-in or any money saved for a down payment, leasing could be an option. Your credit score will play an important role in your monthly lease payment, so be honest about that as well. If you don’t have great credit or a solid work history, don’t expect a lender to let you lease a car at a good rate, or if your credit is bad, they might not let you lease at all. If you won’t be able to lease, you will need to start saving up for a down payment.
If you have a couple thousand or a trade-in worth a few thousand that you can put towards a downpayment and decent credit you can look into lease and finance options. But, like leasing, if your credit score is below average, you will have a higher monthly payment and a higher interest rate than almost all of the monthly finance amounts that are advertised on signs. So don’t let advertisements convince you that your monthly payment for a new Lexus will only be $259 per month. That number is only tangible for people with an excellent credit history and credit score.
Also, consider how much you will spend on gas each month. Do you know how much you currently spend? Does the cost of gas leave your pockets empty every week? If your budget is looking tight, a great way to save some money is by considering a car within your price range that is more fuel efficient than what you are currently driving.
And finally, how much can you afford in repair costs? Will you have some money each month you can set aside for usual repairs each month? Will repairs clean out your savings? If the cost to make emergency or standard upkeep will hurt your pockets, stay away from any type of car without a warranty, foreign or domestic. Air conditioning and transmissions are the bigger ticket items.