Before making a purchase, especially a large one such as a car, most buyers make an evaluation along the lines of: “What is it going to cost me, and will that cost represent real value for money
Obviously it makes sense to make that evaluation when buying your next car. Naturally, you want to get the most car for the money you spend. Here are several tips that will help you to lower your transportation cost.
First, and foremost, consider eliminating some of the steep depreciation cost incurred during the first three years of car ownership by purchasing a 2 to 3 year old used car.
The price can be further reduced by paying cash. However, if you need to finance your next car purchase consider doing the following to keep its cost closer to the “as if you were paying cash” figure.
Take the time to carefully identify your current and your future transportation needs, and choose an appropriate car. A car represents different things to different people.
For some drivers, it represents status in society. Other drivers place greater emphasis on reliably just getting from point A to points B and C.
The more closely that you match your driving needs with the car you buy, the more driving pleasure you will experience and the more likely you will want to hold on to the car. When you reduce unnecessary car sales and purchases, you save money.
If you can’t fully identify your transportation needs or the car that can best satisfy them, it might be worth looking at magazines such as What Car that give full breakdowns of new and used car features and pricing as well as depreciation and maintenance costs.
It is a good idea to identify 2 or 3 cars in a particular category that meet your transportation needs. This enables some flexibility when shopping for the car.
Identify how much you can afford to spend per month on the car. A rule of thumb suggests that the cost to rent an apartment per month should not be greater than 25 percent of your monthly net pay.
Similarly, the cost of a car loan should not exceed 10 to 12 percent of your monthly net pay. In some instances, leasing a car could be a better option than taking out a loan.
The car down payment should be the largest possible, and the amount of money borrowed the lowest possible. In addition, borrowing money for the shortest period of time (i.e., a 24-month loan rather than a 48-month loan) will reduce the overall cost of the loan.
Identify the various loan sources such as banks, savings and loans, credit unions,and national lenders. This site is agood source finance from a variety of reputable sources covering a range of finance needs.
Compare the APR (annual percentage rate) that each of the sources will charge for the loan. The cost of a loan is negotiable. Therefore, be certain to inform each source what the others have to offer.
In addition to the loan’s APR, remember to also compare the other costs associated with a loan, such as loan insurance and loan processing costs.
Be certain to read and understand any fine print contained in the loan contract. Insist that the loan contract gives you the option of making payments early and that the payments will be applied on the loan principal with no penalty or extra cost if you payoff the loan early.
Do not settle for a car that does not entirely meet your transportation needs because of low dealer or manufacturer incentive financing. Sometimes dealers or manufactures offer extremely low APR financing on cars that the dealer is having a hard time selling.
That’s why it helps to have initially identified the correct car before encountering the sales pitches and other influences of buying a car.