Essential Tips and Guideline to Buying Your First Car
Oct 2016
Buying a car is a major milestone in one’s life for many, and may be the cause for uplifting of social status in various places across the world. Anyhow, buying a car is an important event in one’s life whether it’s for either personal or business use. Here are some of the tips that can be essential for financing your car and should not be overlooked.
Start Looking into Pre-financing options
Many car dealers would want you eagerly swaging your way up to them for a cheesy car deal that they would love to put in front of you. Never do that, as doing some research beforehand would always help you in being less gullible to their advices and financing options. Instead look into banks and credit unions and see what they are offering in the first place. You will be surprised as to how much the interest rates differ and with ‘relationship discounts’ being offered, you might not have to look further.
Establish a Realistic Budget
If you can narrow down as to what you are willing to spend on a monthly basis, then budgeting becomes easy. So look into your cost of living and see how much you can spend on car fuel, insurance and maintenance (for cars without warranty). Narrow down your potential buys to a few cars and find out the overall ownership cost. Chose the best one you deserve.
Get Multiple Quotes
Many a times car buyers are charged with a 3% interest on their loan payments by their car dealerships. This can add up to more than a R15 000 over the life of a loan. In order to avoid this, you can finance online where companies tend to have lower interest rates and have no additional application fees. In addition to this, financing rate can be locked for 60 days, and there are no hidden fees, points or payment penalties.finance online where companies tend to have lower interest rates and have no additional application fees. In addition to this, financing rate can be locked for 60 days, and there are no hidden fees, points or payment penalties.
Keep your Credit balance and Debt to Income Ratios Low
If you are upside down on a current loan, then don’t go car shopping, instead bear with it first. You don’t want yourself to be in deeper debt with more payments to make. Hence it is crucial to get your credit balance way below 50% of your credit limit before applying for car financing.
Find All Available Discounts in Advance
While some automakers offer a refund to buyers to promote their schemes, they apply only to a specific group and may not be widely publicized. Rebates are offered by automakers to mostly member based groups, former or current military personnel or even students at times. Such incentives can be combined with discounts by the automaker and can be found on their website under their ‘current offer’ section.
Always go for Brief Loan Term
While lower monthly installments would encourage you to opt for long term loan, higher interest rates would cost you even more over the life time of the loan. This mean that even though in the shorter run you would pay more every month, in the long run you would be saving tons of money instead.
