Buying a car is more than just getting a more convenient means of transportation; it is a huge investment to make. But unlike property, the value of vehicles depreciate rather than appreciate.
You may get a lot of use out of your car, but at what price? There is no point in having a swanky new ride if it puts you in crippling debt, right?
When you are sure that you are capable of putting the time and effort into buying a new vehicle, you need to find the best way to finance it so as not to get overwhelmed by the expenses.
Here are some tips that can help you pay for a new car without breaking the bank.
Pay By Cash
The biggest advantage of paying for your car outright is that you will not have to deal with interest rates from loans or finance agreements.
This is a smart move, but be sure that you will not be overburdening yourself at the same time. Do your accounts properly and see how much cash you can spare for purchasing a new car. Always have money left over for emergencies.
For most paying for a car outright is not a reality. You can, however, pay as much as you can for your down payment to get ahead, reducing loan repayments and interest as much as possible.
Know Your Credit Score
Your credit score is what helps banks and other organizations determine if giving you a loan is worth the risk. A higher risk means higher interest rates. There are various tools available that can help you understand your credit score.
If you are worried about having bad credit, there are car loans out there that still make it possible. Research companies who offer car loans for people with bad credit and compare interest rates to find one that will suit your budget.
Do Your Research
Take your time and shop around before you get a loan. Research the rates that you can get from different places. If you are unsure of the information you find online, do not be afraid to call them up directly and ask questions.
Even if you are in a rush to get that car, it pays to slow down and make sure all your ducks are in a row before making that leap.
Beyond finance options, look around at different car dealerships as well to get the best deal. If any promotions are going on, use them! You might need to compromise on the model of the car you are getting as well.
Keep Terms Short
The scary thing about loans with shorter terms is the high payments. Do not be scared of them. Work out how much you can afford to pay per month before getting a loan. This way, you can ensure that you are getting the shortest terms at the lowest interest rates.
You will be done with your loan payments as quickly as possible and be free of that debt in a flash.
Utilize Tax Breaks
Once again, it is time to do some research. Depending on your employment and income, perhaps even your age, there can be tax breaks when it comes to buying a car. If you are unable to figure out what you qualify for, visiting an accountant may enlighten you to your options.
You might have your heart set on buying a car, but do consider leasing instead. There are three main car leases in Australia. All of them mean that you are borrowing the car instead of owning it.
However, you do not have to worry about the depreciating value of the vehicle. Learn the difference between novated, operative, and finance leases. A lease might be better for you than buying a car straight away.