What is the current condition of your car? If you currently own a car that is more than 10 years old, has more than 200,000 miles, and you spent more than $1,000on maintenance and repairs last year, then I would vote that your car is officially dying! What I mean by that is this: your car is most likely costing you more money in repairs than it is worth to keep. If you’re at this point, it’s probably best if you start hunting for another ride before yours dies completely.
The First Step
This step should really be obvious. Before you do anything, you need to replace your dying car. So let the search begin! Before you head out to the dealerships, I suggest that you search private party vehicles first. If you’re persistent, you can often find a pretty screaming deal somewhere. At the dealership though, it’s a little tougher to find a bargain. So where do you look? I’ve always had a lot of luck with Craigslist. Take a look at the cars in your area and keep an eye out for a few in particular, one’s that you’ve wanted in the past. Take note of the prices and begin to learn what might be a “screaming deal” price.
How Much Can You Spend?
Before you actually make a purchase, you need to understand how much car you can actually afford. If you’d like to pay cash, then it’s time to check your bank account. If you’ve got $5,000 in your savings, then I would advise against using it all on a car. Typically, my rule of thumb is to only spend half of what you have in savings. So, in this instance, I would say that you should really only spend $2,500. Granted, that won’t buy you much car, but in the even that something goes wrong with it, then at least you have some cash to keep it on the road.
You Might Need a Loan
If you don’t have the cash and you absolutely need your car to survive (to get to and from work), then you might just have to get a loan. Don’t think that you have to go to the dealership in order to get a loan though. You can always head to the bank for some money, and it’s most likely at a better rate.
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.