New Year Financial Resolution: Buy a New Car
The clock striking midnight to ring in a new year can be that little extra motivation you need to get on track to save for a new set of wheels. However, buying a new car requires more planning than just driving down to the dealership and signing a few papers. Budgeting how much you can afford and shopping for the best deal on financing ensures you'll enjoy your new ride and make payments without a hitch.
How Much Car Can You Afford
Minimizing Car Costs
If you're still getting your emergency fund together or aren't saving as much, that doesn't mean you can't get a car. However, Silveira recommends minimizing the cost of your new car. He suggests choosing a car that's at least five years old, having two trustworthy mechanics check the car before you buy, purchasing the car from an individual rather than a dealer, and putting down a big down payment or paying cash.
Account for Hidden Costs
Shop Around for Financing
Shop around for financing rather than just accepting whatever terms the seller gives you or only checking with one lender. If you do your rate shopping in a short period of time, according to the Fair Isaac Corporation, all the inquiries will count as just one for credit scoring purposes, so your score won't take as big of a hit. And, don't limit your search to banks. "Credit unions generally have pretty good deals," says Silveira. "The dealer may have good deals on the credit side, but the cost of a used car is higher than buying from a private individual."