Before you consider what sort of car you want it is worth considering your car loan.
A car is a big purchase, and something that you will probably have for many years, so it is important to choose the finance terms that work for you.
One of the first things you should do before looking at cars is to determine your budget. The best way to work out how much you can afford is a rate calculator tool, such as our car loan repayment calculator.
A car loan repayment calculator works just like a mortgage calculator for buying a home.
Running several scenarios through a loan calculator will allow you to figure out what your monthly payments would be if you purchased a car for a particular amount of money.
One rule of thumb for vehicle financing or a loan for a car is to avoid spending more than 10 per cent of your annual income on a vehicle payment. You may be able to afford to spend more if you have minimal debt, so get some advice to suit your particular circumstances.
You should also consider how an auto loan can affect you if your lifestyle changes and whether buying a new or used car will impact your auto insurance premiums.
Buying a car can be an emotional experience.
Having a calculator loan figure ready in your head means that you know how much you can afford to spend before you face the hard sell. After you have run several potential financing scenarios through a car loan calculator, you are less likely to succumb to salespeople who want to sell you expensive vehicles.
Knowing your price range empowers you to say no when the salesperson wants you to purchase a vehicle that won't fit into your budget. It also enables you to pressure a sales person to discount a more expensive car until it meets your loan rate requirements.
Getting a good deal means a high-quality vehicle at a fair price, financed at a competitive interest rate.<
If the dealership’s financing department offers higher rates than your bank for vehicle financing, try to negotiate a better rate or a different scenario.
Sometimes it is worth considering giving them a slightly higher down payment in return for a lower interest rate. Standard down payments for vehicles are between 15 and 20 per cent of the total sales price, not including any trades.
Before you sign on the dotted line at a car yard or dealership, be sure to take the time to compare the prices of the sort of car you want. It is easy to do online.
Remember, you do not get something for nothing in the car world so if a car appears much cheaper than other similar cars in other dealerships, then be on your guard – there might be something wrong with it.
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