Are you buying a car for the first time? Do you know how to pay for it? Here are 9 tips on how to buy a car for the first time.
Don’t Dive into Debt
You will most likely have to take on some debt to buy a car, especially if it is your first car. However, you should avoid taking on too much debt and rather look for a quality pre-owned car that fits your budget and needs.
It would be best to save up for a deposit as this will lower the monthly premiums.
Pay Off Your Car and Get More From It
It is a good idea to get to the end of the term and have your car completely paid off. This will free up some cash to save or if you trade-in, you will be able to get a newer car for less and owe the bank less.
You’re Not Just Paying for the Car
There are extra expenses involved in buying a car, which shouldn’t be forgotten about. These costs like insurance, fuel and maintenance need to be factored into your budget.
You can find used cars with service plans still, which will give you peace of mind, but you may find that not everything is covered. It is then a good idea to save what you can to pay for any maintenance that isn’t covered by the service plan.
Rather Make a Deposit
A deposit will help to lower the monthly premiums and at the end of the loan term, you will own the car.
Balloon payments, on the other hand, should only be used if necessary. At the end of the loan term, you will be responsible for a good chunk of money and only once this is paid will you own the car. A balloon payment or a longer term can lower the monthly premiums, but it is wiser to pay a deposit and take a shorter term.
When looking for a car think about what you need, but also about what you may need in a few years from now. Buying a car is an investment and needs to last you a long time.
Keep Your Budget Honest
The amount that you have to put towards your car is two-thirds of your disposable income, which is the money you have left once all and every expense is paid for. The amount that you have left can be divided into thirds, with one-third going towards savings and two-thirds going towards your car buy.
Remember to factor in the monthly instalments, fuel, maintenance etc.
Apply for Vehicle Finance
If you are ready to apply for vehicle finance then you can do so at the bank or the dealership.
Watch Out for Interest
The interest is based on your credit score and profile. Generally, a lender will look at how responsible you are with money, however, if you don’t have a credit history it could be harder for you to get finance or you will pay a higher interest rate.
Keep Your Credit On Track
If you have been approved for vehicle finance, then make sure to pay on time and in full. This will build your credit history and score. Keeping a good credit score means that getting future credit will be easier to get and you will benefit from lower interest rates.
Buying a car for the first time is exciting, but you must know your financial limits. You can shop for pre-owned vehicles and take on less debt. You can find hundreds of quality pre-owned cars at Cars2Sell, where buying a car is made easy. You could be behind the wheel of your first car in no time at all.