Car financing and budgeting: A guide for you

Buying a new car is always exciting whether it is your first after passing your test or an upgrade on your current model. But that experience can be dampened when you think about your financial options and how you will afford the car.

Here are some tips to get your car budget started so you can afford the car of your dreams.

Understanding your options

When you think of buying a car, you are often faced with the dilemma of either leasing or buying. It can be hard to know which is best. If you do not have the funds immediately available, financing is a great option for you. Regular monthly payments mean you can budget for them. Alternatively, buying outright removes the monthly payments and you do not have to think about it again.

If you do opt for financing a car, you will find your credit score may improve provided you manage the loan correctly. Making payments on time indicates that you are a reliable and safe borrower to future credit lenders.

Budgeting for your new car

It can be easy to let your imagination take over when you think about the car you want. Unfortunately, Ferraris aren’t available on budgets that are better suited to Golfs. This means you will have to be realistic about your finances.

You will have to consider the overall cost of car ownership, not just the initial purchase price. Fuel, maintenance and insurance will all add up. You may also need to purchase insurance for a day to get the car back to your home.

It may be costly to get a car with all the latest technology as that can drive up the price. Instead, make a list of things you need in a car such as air conditioning, and a list of wants like heated seats. Then find a car you like with only the things you need. That is a good starting price for your budget.

Negotiating at the dealership

It can be intimidating walking into a dealership but if you do your research beforehand you will feel more confident. Go in with an idea of the sort of car you’d like and stick to viewing that model. This will prevent you from getting swayed to something more expensive.

You can also spend time getting quotes from different dealerships when it comes to both buying outright and financing. By having that information at hand, you will be able to see where is cheapest. If there is a specific model you like at a different dealership, you may be able to use lower quotes to negotiate a better deal for yourself.

Always remember to read the terms of your contract before you sign it properly. You need to understand what you are signing before you put pen to paper in case there are any legal terms you do not understand, or penalties you need to be aware of.