Are you getting ready to buy a car? It can be an exciting thing to shop for, but remember that as soon as you drive your new car off the lot, it depreciates in value. As such, you’ll want to make sure you’re completely satisfied with your next vehicle purchase. From getting more than you bargained for, to spending too much, the following are some costly car-buying mistakes you’ll want to avoid making:
Overlooking the financing terms
If you’re shopping around for a car loan, it’s more than just accepting a loan that offers the amount you need and with monthly payments you can afford—you need to look more specifically at the financing terms you’re agreeing to. Instead of just making sure that you can afford the monthly car payments, you’ll want to look carefully at the other terms, including the interest rate. Depending on your interest rate, you may want to reconsider and explore your other car or loan options. With a high interest rate, you could be spending a lot more for the car in the end than you ever planned on. If you can’t qualify for a better loan with a different lender, you may want to avoid the car loan completely and just save up enough cash to purchase a used car.
Only thinking about the monthly car payments
Too many car buyers forget to focus on the overall cost of the car, rather than the monthly payments. This not only includes the price of the car, but other factors that can cost you a lot of money over the years. For instance, if you’ll be driving a lot, you want to think about how much you’ll be spending in gas. If you’re looking at a car that’s within your budget, don’t overlook how many miles per gallon you’ll get. Even though the car itself might be affordable, will you end up paying a lot in gas expenses, especially compared to an eco friendly option? Something else to consider is your auto insurance rate, and to remember that the specific car can influence how much your rate is. These are just a few examples to consider, so you’ll want to think about all the different expenses that are involved when it comes to buying your car, and factor in these various costs when making your final selection.
Not pulling the VIN report for a used car
If you’re purchasing a used vehicle, whether from a private seller or a dealership, you’ll want to look into the car’s background by access its individualized VIN report. Even if the price is right, you don’t want to deal with expensive problems and other issues immediately after purchasing your car—especially if they are problems you didn’t even know about. Although there are lemon laws and other regulations that are set in place in order to protect consumers, you can avoid a big mess like that completely just by viewing the car’s VIN report first. If the seller refuses to offer you the VIN and won’t provide you with this information, move on to something else—this is a red flag that should be taken seriously, and even if it’s not the case, you don’t want to risk that the seller might be hiding something serious.
Purchasing a car that’s too pricy
All of the costs for the vehicle you’re considering are affordable, but are you stretching every last dollar to make it work into your budget? Being able to afford a particular car doesn’t mean you have to buy it if it means pushing your car budget to its limit. If you’re barely getting by at the end of the month by the time you make your car payment, insurance payment, and taking care of other expenses for your vehicle (gas, repairs, etc.), then you may have made the mistake of purchasing a vehicle that’s just too expensive. You’ll want to make sure that the car you select fits very comfortably into your budget and gives you plenty of breathing room, and still allows you to put money into savings each month. If you have very high car payments, you might eventually get overwhelmed, especially if you lose a job or something else happens. If you no longer can afford the expensive car payments, your credit score will go down and your car could be repossessed.
Do you need cash to buy a car? Peachtree Financial Solutions may be able to help if you’re receiving structured settlement or annuity payments. Contact Peachtree Financial Solutions today to learn more about selling some or all of your future payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.