Have you been holding out to find the perfect car deal? Surely you can snag a deal year around if you’re buying a car cash right from the owner. But not everyone has access to cash and most need to trade in their car and finance the rest at a dealership. Before you sign on the dotted line, take a closer look at your financial situation by asking yourself these questions.
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Which month offers the best car deals?
You can find deals at most dealerships, but what is the best time of the year to buy a car? Typically around Thanksgiving through the end of December is the ideal time to find the hottest deals with the highest discount on a new or used car.
Most dealerships have year end goals they need to hit and you can usually find bigger discounts in the last few days of December. New Years Eve is notorious for getting great deals, car salespeople are in the mad dash to meet their year end goals.
Can I afford to buy a new car?
You have to consider all costs that go into buying a new car. Whether buying used or new, you need to pay for all the associated fees like sales tax, registration, new insurance premium prices and sometimes downpayments.
Newer cars, especially sports vehicles, have a higher insurance premium. If you are struggling to make ends meet, don’t allow shiny car syndrome to steer you off track. Get your finances in order first, pay off debt, save money and then reconsider.
If after reviewing your budget you find that you can afford a new car, opt to get a gently used one. There are plenty of safe, reliable and affordable vehicles that have miles on them that’ll last you for years to come.
Will buying a new car impact my long-term goals?
Are you on track with your short term and long term goals? If buying a car is going to prevent you from moving forward financially, you might want to wait, unless it’s absolutely necessary. Give yourself a timeframe on when you’d like to buy a new car. If your goal is to buy a new car in 2022, set a limit of what you want to spend and save monthly.
For example, if you want to spend $7000 on a new car, save $583 a month for one year. This amount can vary depending on when you need to buy a new car, trade-in value of current car or financing the auto loan. Either way, if you save and drop a large lump sum of cash on the purchase of a newer car, or pay for it up front in cash, you’ll be ahead of the game!
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Is A Car Lease A Better Option?
Leasing a car might be a better option for those with credit challenges, smaller down payments or for someone who doesn’t drive a lot of miles annually. Keep in mind that when you lease a vehicle, going over your contracted mileage at the end of your lease could cost you more when you turn your vehicle bank into the dealership.
You’ll be charged penalty fees in some cases as much as 15-20 cents per mile! These overages often cause leasees to purchase their cars because the penalty fees costs as much as a downpayment.
When you purchase your leased vehicle due to over mileage, very little of your monthly payments have been going towards the principal balance. Meaning, your purchase price is going to seem higher than what you would expect because you’d been paying a premium monthly amount without the loan being paid down.
Should I trade in my car?
Try to sell your car on your own first, usually, you can get more money. But selling on your own is tedious especially if you have issues you need to fix. Selling on your own means being available to show the vehicle to potential buyers and fix issues to get a higher sale.
Sometimes investing more money into the vehicle isn’t worth the cost of the vehicle. That’s why most choose the ease and convenience of trading in a dealership, even if it means a lower trade-in value.
Good rule of thumb: If your current car has no issues and is reliable, keep it, especially if you’re not in a position to buy a new one.
Look for end of year model sale
During holiday and end of the year sales, dealerships are looking to push out their current years models to make space for upcoming models. Be on the lookout for models that are getting a completely new redesign or discontinued.
Do I need a good credit score to buy a car?
A better credit score will give you better interest rates and more buying power, but it won’t prevent you from getting a loan from some lenders. Monthly payments are determined by interest rates and loan terms. With extended loan terms comes more interest and ultimately a higher principal balance.
Leasing vehicles often gives you more affordable monthly payments versus buying it, but nothing to show for it in the end. Read more here for further details on credit requirements for buying a car.
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