Many consumers shop for a new vehicle near the end of the year. If you’re in the market, take a closer look at your finances to see if now is the right time to buy a car. There are multiple indicators that can tell you whether or not you’re ready. Before you set foot on the lot, check on your credit and examine your budget!
Before Deciding to Buy a Car
Whether you just want to change vehicles or truly need a new car due to mechanical issues, it’s important to look before you leap. To help make the decision, carefully examine your complete financial outlook. You need to be certain you can afford a car or determine if working on debt management might be needed first.
- Check your credit report and score. Your credit will determine the terms of any financing you use to purchase a vehicle. You can check your credit report by visiting AnnualCreditReport.com. You should also check to see if your credit score is included on any of your statements. If not, you can access it for free at CreditKarma.com. The higher your score the better, but if it isn’t above at least 650 you should look to improve it before car shopping in order to get a reasonable interest rate.
- Assess your budget. No matter your credit score, you need room for a car payment in your budget. See where you can make cuts, and determine an amount you can afford to take on. Figuring out your price range is essential before you start shopping. Try using a car payment calculator to figure out how much you should expect to pay.
- Save up a down payment. Depending on how much you can afford to pay each month, the amount you put down is very important. Are you trading in a car? What is it worth? Try to avoid borrowing from your emergency fund for the down payment. Depleting emergency savings could leave you needing help with credit card debt if unexpected expenses come along.
Car Buying Tips
If your ducks are in a row and you’re ready to buy a car, here are some tips for getting a good deal.
- Timing is key – Quotas are real. The end of the day, month, and year will add up to easier haggling with dealers who need to sell.
- Look for sales & promotions – Holiday sales or model-year ending events will have dealers trying to move certain models.
- Don’t low ball – Be reasonable during negotiation. Make a real offer so that the dealer takes you seriously.
- Test drive! – It’s fun to drive a new vehicle. You should also try sitting in the other seats to know how comfortable it is.
- Shop around – Visit multiple dealerships and try out different makes/models. This is a good way to practice negotiating. Dealers may call with better offers after you leave the lot.
A Final Tip…
Don’t buy more car than you can afford. If you have done your due diligence and know what your budget can handle, stick to the plan! It’s easy to get distracted by the latest model and fancy features when you’re car shopping. Remember that this is a financial decision with potential implications for years to come. Getting in over your head with a car loan is one of the easiest ways to end up drowning in debt.
Now is the time to do your homework and determine it’s the right time for you to buy a car. Even if you figure out that it’s probably not a good idea, you’ll gain a lot on insight on your financial situation. Plus, you’ll be ready to make great choices when the time is right!