Budgeting for a car is as important as budgeting for any other activity. Here are some pointers that will come handy when you decide to buy a car, old or new.
The first step is to work out your expenses; and then the savings. Check how much you can save up for your car. When you buy a car, there are many costs that come along with it. Keep a margin in your calculations to meet costs such as fuel bills insurance premiums and servicing.
Set a budget and stick to it. Ignore all that the dealers or the finance company has to say. Especially, if they say that you can afford more. And, there is NOTHING such as a zero percent loan.
Assess whether you need a brand-new car or if an old machine will do as fine. Depreciation is a major chunk of the cost of owning a car. Even if your car is just a year old, there is a hefty amount to be lost should you sell it. This essentially means that you can buy an old car on the cheap. If old is as good as new, why empty your pockets? Remember, buying a car as an investment option may not really work. Registration costs, insurance, maintenance; such costs can’t be recovered if you were to sell the vehicle.
While it is advisable to buy a house on loan, a loan should be the last resort to buy a car. Save up on cash to buy the car. Car financing can be expensive. And, no tax benefit on the loan unless you lease it out. Buying a car outright can get you discounts.
If you are looking for a loan to finance your car purchase; shop for a loan first. While a housing loan lays emphasis on the actual property, buying a car via a loan lays primary emphasis on the finance options available. Arrange for the down payment. DO NOT go the personal loan or loan against security route to get the cash.
Once you have checked out your finance options, assess your car. New or old, ascertain the one you need. Assess the purpose – whether you want to rent it or use it for personal needs.
An important step of budgeting is to get an estimate of the price. Do your homework and set a target price. Use all the channels available. The Internet being the quickest, visit as many dealers and agents as possible to get estimates.
Make negotiations before you purchase. Don’t let the dealer eat up your savings. Don’t take discounts as they are. Make sure the offers are indeed discounts, not future expenses hidden away inside them.