What You Should Know Before Starting the Car Buying Process

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What You Should Know Before Starting the Car Buying Process

Buying a car is an important purchase, and not just because it gets you from point A to point B. A new car is an expression of your style, preferences, and taste. But, what should you know before starting the car buying process?

Before buying your next car, you should research whether you are going to buy or lease, where you will get financing, how much you have to save for a down payment, and which car is the right purchase for you.

What You Should Know Before Starting the Car Buying Process

Buying Vs. Leasing

The age-old question when getting a new car is whether you should buy or lease. The first question to ask yourself when deciding whether to buy or lease your next car is: how long do you plan to keep it? If you enjoy getting a new car every few years and don’t like to worry about maintenance, a lease might work. If you want to own your car outright and plan to drive it for longer than its financing terms, buying might be better.

Another thing to consider before starting the car buying process and when deciding whether to buy or lease is your future car’s maintenance. If you lease a car, you don’t have to worry about unexpected breakdowns or repairs because they are covered by your lease. But, you pay a premium for this luxury. If you don’t mind paying for regular maintenance checks as your car ages, or can work on it yourself, buying could be a good bet.

There are more factors that go into whether you should lease or buy, including the amount you drive, whether or not you want to customize your car, if you have enough money for a down payment, and more. Check out this auto loan and car lease resource for more information.

What You Should Know Before Starting the Car Buying Process

How You Will Finance the Car

If you do decide you are going to buy your next car, another thing to consider is how you’re going to finance the car. Unless you are paying all cash, you will likely need to take out a loan for your new ride. Some people think that the dealership offers are the only financing options you have available, but that is not the case. You can go through more research to find lower interest rates and better terms. Money Under 30 explains how to finance a car in an effective way:

  • Know your credit score before you step foot in the dealership.
  • Online lenders, banks, and local credit unions may be able to offer better financing terms
  • Keep the term as short as possible and put down as much money as possible to save money on interest in the long run. This author suggests 20% of the car’s price.
  • If possible, pay for taxes and fees with cash.
What You Should Know Before Starting the Car Buying Process

Saving for a Down Payment

As mentioned above, if you are buying your next car, try to put as much money down for a down payment as possible. The more you put down now, the less you will have to finance and the less interest you’ll have to pay.  Before even starting the car buying process, know your down payment goal and how you’ll save for it. A few ways to save money for your down payment may be:

  • Starting a side business to earn a little extra cash
  • Investing with robo-advising apps to help you save at any time
  • Analyze of your spending and see where you can cut on your expenses
  • Put aside a set amount of cash every month
These are just a few ways to save for a down payment on your next car. But, if you have strong credit and not a lot of cash, you may want to consider leasing. One benefit of leasing is that you can put down no down payment, or the just the bare minimum, if you have strong credit. This is great for individuals who are strong on credit but low on cash. But remember, you will still have to make your lease payments on time, in full, or you may default on your loan.

What You Should Know Before Starting the Car Buying Process

Choosing the Car

Now that you have all the finances figured out, it’s time for the fun part! Picking out the right car for you and your family is a personal decision, but there are some key factors to consider when scoping out the market.

The first is how much you drive, and how much you want to spend on gas. As gas prices continue to rise, more and more individuals are turning to small sedans, hybrids, and electric cars. Not only are hybrids and electric cars better for the environment, but they also save you money on gas.

Next, consider your space requirements. Do you have a family of five? If so, an SUV or minivan might be the best choice. Is it just you and the open road? Check out the newest models of coupes or convertibles. Sensible? Choose a practical, reliable sedan. Want to go fast? A European sports car might have your heart. Compare and contrast many different options before starting the car buying process.

Lastly, of course, you will need to consider your budget. While we all have our eyes on that shiny new sports car, that might not be the most financially-savvy decision for you. Consider, too, not only the price of the car, but also insurance, registration, maintenance costs, parts, taxes, and closing fees.

Choosing a new car is exciting! Follow these tips before starting the car buying process to be even more prepared.