One of the biggest purchases that anyone will ever make is a vehicle. Aside from buying a house or paying for college tuition, purchasing a car is another expensive, time-consuming endeavor that needs to be effectively planned for, just as are budgeting for a home or the costs of higher education.
In a perfectly laid out plan, people would be able to save up for the cost of a new auto and pay for its entirety at the time of purchase. As the starting price of a modest car is well over $10,000.00 today, setting aside the funds for any vehicular purchase will be challenging for many budgets.
The first tip is to set a realistic goal based on the dollar amount to be spent and when the individual plans to buy the car. If feasible, the plan should be set to buy the vehicle as close to the end of a calendar year as is possible, as car dealerships are moving out the current year’s stock and replacing it with the upcoming year’s models. This is an ideal time to make a purchase as well to leverage one’s negotiation skills, as the dealership’s ultimate goal is to move out the leftover vehicles from its lot.
Prospective buyers should also check their own credit scores well in advance of shopping for a car. If a consumer will require a car loan to make the purchase, the probability of qualifying for a line of credit, let alone one with a lower interest rate are more likely if the individual has a credit score in good or excellent standing. This is a great opportunity for the prospective customer to verify any records on his or her credit report and proactively make any amendments to any items that may have been erroneously documented. As this may potentially impact the size of a loan as well as its interest rate, this is a crucial step for the prospective buyer to take well before he or she steps foot in an auto dealership’s showroom.
By behaving as though one already has secured a loan and is making payments toward it for six or 12 months is another means of saving for the purchase of a vehicle. Being able to set aside money each month helps the prospective car buyer calculate whether he or she has enough financial flexibility to afford a car payment. Simultaneously, this practice will lead to savings set aside and will help provide a substantial down payment toward the vehicle once the purchase is made.
If the prospective customer has a vehicle that will be replaced by the new car, the current vehicle should be cleaned and receive a tune up in order to make it appealing to a prospective buyer (if the owner plans to sell the vehicle on his own) or to help ensure that the vehicle will receive the highest amount for its trade-in value from the car dealership. Any funds received for the vehicle being replaced with the new car purchase will be a helpful addition toward the down payment for the new vehicle.
Though purchasing a car is an expensive undertaking, carefully planning ahead and weighing the options available will allow the prospective customer to save for the purchase of his or her new vehicle.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.