A car is a very big-ticket investment. It has significant financial implications for you or your loved ones because it isn’t a one-time payment. You can’t just forget the other costs that come with it after purchasing one.
Without thoroughly educating yourself and having a proper plan, you could put your family and yourself into financial hardship. To avoid any financial burden, here are some money-saving tips to consider before purchasing an auto loan from SCCU.
Do Adequate Research
First and foremost, know what car you want. If you’re a first-time buyer on a budget, focus on what you need. This can help you lower car payments and expenses, including fuel, repair, and maintenance costs. Once you determine your ideal car, start doing research.
Researching isn’t simply getting your head in between printed and electronic sources. It also involves taking your car of choice for a test drive and comparing offerings from various manufacturers.
Visit the Dealership With A Plan
Never go into a car dealership without a plan and purpose. If you come unprepared, you could get distracted by the bells and whistles and go home with a crater-size hole in your bank account. Always remember that a car purchase should never be an impulse buy.
Specifically, remember the following don’ts when you’re planning to run your research at the dealership:
- Don’t discuss trade-ins too early. Don’t get pressured by a sales talk, and decline offers as much as possible until you’re fully aware of any trade-in’s value and financially ready.
- Don’t leave your car key and driver’s license. They’re usually asked before a test drive but shouldn’t be taken from you as a sort of security or deposit. If dealers take them from you, they’ll likely want to keep you in the showroom until a deal is made.
- Don’t allow the dealership to check your credit. Dealers must run a credit check if you plan to finance your new car with a loan, but only when you’re about to make a deal. If you’re a long way from buying, a hard pull will only hurt your credit.
Get Pre-Approvals For Loans
Another thing you should do before setting foot at the dealership is get preapproved for a car loan outside the dealership, like from banks, credit unions, and online lenders. These financing companies will normally inform you about your credit, including your creditworthiness, interest rate, and even credit problems that most dealerships won’t tell you about.
For example, if you’re planning to take out loans from CreditNinja New Orleans, they’ll let you know that you can qualify for a lower interest rate. On the contrary, what most dealerships do is jack up this rate even higher, like a 9% rate, than what you actually qualify for—and they’re allowed to do that. So without knowing your credit condition, you might end up paying thousands of dollars more in interest at the dealership.
Overall, pre-approvals are valuable cards you must have in your hand in the car-buying game. They can even be a bargaining chip in negotiating a better rate with your dealership. For example, if you mention to your dealer that you’ve been pre-approved at 4.5%, they’ll likely offer you a 3.5% to make their deal more compelling than other lenders.
Since the dealership’s rate is better, it’s a good idea to take it. Just ensure that the loan terms, such as repayment terms and down payments, will remain the same.
Consider Used Cars
Secondhand cars are worth considering if you’re looking for functionality and a way to save money. But they’re much better now than before! Experts claimed that now is actually their golden age. Their reliability is astounding these days; you can drive them for another hundred-thousand miles.
Contact the nearest local car dealership in your area to know the best offers for second hand vehicles in town. Moreover, some vehicles, like the European models, are infamously costly to maintain. Hence, read reviews and ratings on car brands and models and opt for used cars less likely to run into costly repair issues down the road.
Clear Financial Goals
As mentioned, owning a car is a huge financial responsibility. That means you must constantly spare funds for many expenses, including fuel costs, car repair and maintenance fees, toll and parking fees, and auto loan amortizations (if you have your car financed). Not only that but being financially responsible for your vehicle also entails that you have to invest in car insurance.
Before purchasing a car, your income sources should be sufficient to afford it and all your essentials, including basic needs, savings, and emergency funds. The last thing you want to experience is to live paycheck to paycheck or, worse, be unable to save up and pay off other debts because the car payments are too hefty for your current financial situation. See to it that you won’t bite more than what you can chew.
Final Thoughts
Choosing your ideal car can be quite confusing due to an endless river of car brands and models coming off nowadays. But always remember that the best one fits your needs and financial capabilities.
