Purchasing a vehicle is a big step, not only because it becomes your responsibility to maintain and keep running, but because it’s most likely the second biggest expense you will ever pay out after your home.
When it comes to financing a car, not everyone can afford an instant payout. Debts and depression are usually the fears that spring to mind when discussing purchasing a vehicle on finance, however when handled in the correct way, there are many options that you can tailor to your own individual lifestyle.
How much can you afford?
The first step is to establish how much you can afford to pay out on a monthly basis. Creating a budget will ensure that you wont be dazzled by shiny colours and large engines and make a decision to buy a vehicle you can actually afford to pay for.
Start with your rent/mortgage payments and bills and then move on to personal luxuries, ensuring that the monthly payments won’t eat into your social life. It’s also best to make sure you have left over in case of any emergencies too.
If your current situation is more in the minus department, make sure you communicate with vehicle dealers and see what opportunities they have for low rate finance and customers with a poor credit score. There’s always something available for everyone.
Have some money already but not enough to buy your car outright? Put the lump sum into a nice deposit instead.
Have you sold your own vehicle?
If you have a vehicle to sell, make sure you try to get the best price to help towards your new purchase. Trading it in is usually the easiest option but not the best. Private selling will ensure full control and a higher profit.
Have you found out your credit score?
Don’t forget, when multiple companies from insurance companies, and lenders request credit checks, it can have a negative affect on your overall score. Make sure you request a personal copy of your score and carry a print out with you.
If the credit card company that you approach states that your credit score has shown a sudden drop, you can ensure that you have proof of what your score was when you first started shopping around.
Have you compared interest rates?
Whether it’s a personal loan or hire purchase you’re looking for, always ensure that you have thoroughly compared interest rates. A great place to start is with advice from friends and family who have recently experienced a good deal and a long search through web comparison sites.
It’s best to look out for low, fixed rates from reputable companies, as well as flexible repayment options.
Take an experienced friend with you
Finally, when purchasing a vehicle always take someone with you who is experienced in this area, whether its members of your family, or a close friend. It’s always good to have a second opinion or simply someone who can take notes ready to compare to the next deal you come across.
Photo Credit: Flickr/Gareth Williams