How To Know If You Are Financially Ready To Buy A New Car

Buying a new car takes some consideration and careful planning. Making sure you can afford a car that fits all of your needs is essential. There are a few things you can do to ensure that you purchase a car that fits nicely in your budget:

Examine Your Spending

If you are considering a new car, you will have to decide how that will change the spending of your current income. Look for expenses that you can do without, but don’t feel pressured to change your lifestyle in the process. Once you identify a portion of your discretionary income that you don’t have to spend each month, set that as your budget for your monthly car payment. Eating at expensive restaurants often is one simple change you can make to start saving for your car payments.

Saving Your Down Payment

Many people take their down payment out of their savings, but that isn’t recommended. Reducing your savings account reduces your assets in the long run. The money you take out is no longer earning interest. Leave the money to draw interest instead of spending it on a car, which begins depreciating once you leave the lot.

Take your projected monthly payment for your car and set it aside for your down payment. Using the amount budgeted for the payment works for two reasons. It builds your down payment and it helps you determine whether you can afford to spend the money each month. If you are struggling while saving for the down payment, then you can’t afford the monthly payment.

Check Your Credit

Your credit rating plays a critical role in your ability to afford a new car. The higher your credit rating, the lower your interest rate will be. With a low interest rate, more of your monthly payment will go towards your principle. When you examine your credit, highlight any incorrect information and get it corrected as soon as possible. Disputing inaccurate information on your credit file can take 30 days or more.

Shop For The Best Rates

After you have your down payment and your credit is where it needs to be, shop for the best rates. Evaluate manufacturer’s promotions and rates from banks and credit unions. The better the rate, the more you will save over the life of the loan.

Talk To A Reputable Dealer

Find a dealer that is friendly and has a desire to get you the best deal is essential. A good dealer should provide assistance to help you find the best financing options, says the professionals at Premier Mazda in Kansas City. No matter what your credit score, they should be able to offer you financing options that fits your needs.

Discretionary income is essential to affording your next car. Since you don’t want your lifestyle to change after your purchase, make sure you can afford it with your current income. If you can’t, don’t force the purchase. There is nothing wrong with waiting for a better deal at a later time.

Tags: Buy A New Car, Loan

Category: Car Finance