Top Smart Tips for Buying a Car
Modern-day cars are all about that jazz. Fancy interiors, handy features, plush leather seats, and not to forget, much better safety standards and advanced technology to ease our lives.
But despite the evolution of cars, the way we purchase them is yet to change. Most consumers make major mistakes while buying a car – from falling into debt traps to paying more for less. Not the best finance strategy, we must say!
But don’t fret. We’re here to show you how you can buy your favourite car without having to empty your pockets or crying over loans for the rest of your life.
- Arm yourself with a pre-approved loan before entering a dealership
This is the single best advice anyone can give you before purchasing a car. Getting a loan from a lender who doesn’t sit at the car dealership will prompt you to think about how much can you afford to spend on a car. And it is important to do that before a salesman lures you into buying that limited-edition variant that you will have to pay for with your kidney. Additionally, having a pre-approved loan will also reveal problems you may have with your credit ratings and help you rectify it.
- Don’t get into a battle of the wits
When you’re buying a car at a dealership, focus only on one thing at a time. Begin by asking the price of the vehicle you are buying. Often the salesperson will want to know if you are planning to trade in an old car, or whether you need a loan from the dealership. Avoid answering those questions and focus only on the car. This will help you negotiate better on the purchase price of the car you are eyeing. Once you are done negotiating the price, then move on to discus trade-ins and other offers they may have.
- Avoid add-ons at all costs
Buying a car can be a tiresome process. Wait at the dealership for hours, negotiate a great deal, haggle over the exchange rates, and then finally head to the finance manager to complete formalities. However, once you are in there, you realize they are trying to now sell you extended warranties, parts protection plans, and some other incomprehensible jargon. Dealerships make a whole lot of money on these add-ons, and most of them are overpriced. What do you do? Just say no. Nothing more, nothing less.
- Don’t take long-term loans
The concept of taking extra tenure to pay off your loans is a dangerous trend. A 10-year loan might seem like paying a lot less money in monthly EMIs than a six- or-seven-year loan, but it also means paying a lot more money in the form of interest, which ultimately jacks up the car’s price significantly. You are also paying more interest compared with principal in the first years. And always, always read the fine print before you sign anything on that loan document.
- Don’t keep changing your car frequently
Car expenses should be no more than 15-20% of your total take-home money. This amount could be lesser in case you have other debt obligations to fulfill, like a home loan or a child’s education. If a new car with a short-term loan plan isn’t fitting into your budget, you might as well spend on a second-hand car. The reliability of used cars is pretty remarkable these days. Most people tend to dispose their cars in less than three years, even the ones in pretty good shape, so it is easy to get a great car at a much affordable price. Buying used cars is a great way to save money on something that will only depreciate in value.
Imagine the things you could do with all the money you save on buying a car! So, the next time you think about purchasing a brand new four-wheeler, keep these tips handy.
Ayantika Halder is a dreamer and believes that sky is not the limit. She is a firm believer that pen is mightier than sword and spends most of her day reading and writing. In her spare time, she loves watching TV series, movies and is already planning for her next trip.