Thinking about financing a car? These 10 ideas will help you make a better decision!
October 6, 2016
There was a time not all that long ago that owning a car was a considerable privilege for the American elite, but in today’s world most families have at least one vehicle. Our needs are expanding and more people than ever are making a daily commute to and from work. Despite the commonality, however, buying an automobile is still a considerable purchase. Here are ten things to keep in mind when financing your next vehicle:
1. Consider your price point
This is a big factor that isn’t always given enough thought. When buying a car, you want to make sure you don’t overextend yourself. Vehicles require maintenance and upkeep to remain reliable and this expense must be factored in addition to your new car payment. The costs of these expenses will often be influenced by reputation or age of the vehicle. Remember: an older car can often be had for a song, but there will typically be higher expenses in maintenance than a newer vehicle.
2. Consider the type of vehicle that is best for your needs
A 2-door convertible can be a lot of fun in the right application, but it can also be a mistake for a family of eight looking for a vehicle to chauffeur children to sporting events. Make sure that the style of vehicle you choose not only suits your tastes aesthetically but is also practical for your intentions. On the other end of the spectrum, a 4-wheel-drive pickup may be just the thing for difficult winter driving or towing recreational vehicles, but fuel consumption is likely higher than a similarly-priced sedan for commuters.
3. Keep in mind future changes in your family or career
Baby on the way? Hoping to land your next job in the neighboring metropolis 30 minutes away? These can be important factors when choosing which vehicle to finance. Make sure that your choice is sufficient for your future needs as well as your present. While it may be impossible to see the future with certainty, a little contemplation now can save a headache later!
4. Know your lender
Consider who you’ll be financing your purchase through. Some larger companies may have employee credit unions which offer reduced rates for employees. Likewise, many dealers offer special promotions which may prove a better value in both the short and long term. The bottom line: be sure you know where your loan is from as well as a little about the reputation of your lender.
5. Understand your terms
$2000 cash back and a free can cozy today may sound great but could come attached to a much higher interest rate or other stipulations. Make sure you understand the fine print in your agreement before signing on the dotted line. Most dealerships (and certainly any reputable bank) should be able to describe the exact details of your contract. If something doesn’t make sense, take the time now to ask questions until you’re satisfied.
6. Don’t forget proper insurance
Of course, insurance is important no matter what, but most loans require full coverage insurance (*1) to protect the lender in the event of devaluation of the vehicle (whether by an accident or other means). Make sure that the insurance you purchase meets the requirements of your lender while also being sufficient for your needs as protection for your new investment!
7. Have the vehicle’s condition reviewed by someone with experience
This can be as simple as bringing it past a friend who is a mechanic all the way to scheduling a vehicle inspection with a trusted professional. Of course, when buying new, this should certainly be less of a concern and many potential issues are covered by manufacturer’s warranties. Buying used, however, can be either a very good or a very costly decision depending on the mechanical condition of the car (*2). Make sure someone you trust takes a peek first!
8. Know the vehicle’s history if buying used
Obviously a lesser concern for those financing a new vehicle – though nevertheless prudent to know the reputation of the make/model you are purchasing. Yet for those buying used, it’s very important you request a vehicle history. Most dealerships will be more than happy to oblige.
9. Do your research!
There are many consumer and professional review sites across the Internet. Take the time to read up on the car you’re considering purchasing. Even new vehicles can have peculiarities or recalls. It’s worth the extra leg-work to know what you are buying before the papers are signed.
10. Shop around for both rates and automobiles
It’s often easy to lock in on one vehicle early in your search, but don’t be afraid to take a little more time with your decision. Test drive several vehicles if possible so that you understand the pros and cons of different styles and price ranges before financing. If your in the greater Toronto area check out the best car loans in Toronto at T Dot Car Loans. Remember, a good purchase can continue giving for years to come – and so can a bad purchase! Don’t be pressured into buying too quickly or without seeing all the options available.