When wanting to purchase a new car, there are so many factors that you need to consider – the most important of them being to determine what you can afford.
Jeff Osborne of Gumtree Auto notes a few vehicle financing tips that you need to keep in mind ahead of purchasing your new dream ride.
- Draw up a budget that includes your monthly instalment, monthly insurance, running costs (like fuel and oil), maintenance costs and wear items (like tyres).
- Shop around at different dealers or browse online – you’ll be able to compare prices and choose the car that best suits your budget.
- Remember, paying cash for a car is your best option but if you cannot afford it, research pre-approval finance options at various financial institutions before you go car shopping. Compare these options and choose the one that best suits your pocket.
- Keeping the instalment period as short as possible will not only result in you paying off your car as quickly as possible, but will help you save on interest costs.
- When agreeing to finance, determine whether the interest rate is a fixed one or variable. Fixing the rate will result in you paying a set figure each month whereas variable rate will leave you vulnerable to rate fluctuations.
“The point is to be prepared so you could make an informed decision about your purchase”, continues Osborne.
To help you budget more efficiently and to determine what you can ultimately afford, financial institutions host online finance calculators that allow you to experiment with instalment amounts, different time periods as well as interest rates.