Is now a good time to buy a new car? If you've planned your budget and found a vehicle that fits your budget, it might be!
Buying a new or used car is a significant purchase. It's nice to have a new ride to get you everywhere you need to be—but it's also a monthly commitment. Unless you have the cash to pay in full on the spot, planning ahead for a car purchase is a smart way to save for the downpayment and manage your finances with a new monthly payment.
In many cases, consumers have time to budget and plan for a future car investment. Whether you have a few months or a few years until you need a new car, follow these tips to budget and buy a new car.
Determine Your Budget
If you're wondering, "should I buy a new car," make sure you have the budget for it first. When you have the funds and the time is right, the car of your dreams could be yours with planning and saving. However, if it's simply time to upgrade an old, well-loved car or trade-in an unreliable vehicle, start by understanding your finances.
What are your current expenses? Can you afford to add a car payment while covering your current bills? How much car can you afford? Don't forget to consider estimated costs for auto insurance, maintenance, and filling up the tank, too.
List out your existing bills, including rent or mortgage, utilities, healthcare, phone, food, and credit cards. Compare to your monthly income and determine how much you can put toward a car payment every month.
The best way to buy a new car is to start with a budget that includes a downpayment you can afford. With that information in hand, you can search for a vehicle that fits your budget while saving for the downpayment.
Save For a Downpayment
To arrive at a monthly payment you can afford, you need to buy new car in the right price range and offset the monthly car note with the right downpayment amount. Putting more money down on the day you purchase the vehicle can reduce your monthly payments significantly.
Putting money aside every month for a downpayment is a good habit to begin in preparation for your monthly car payment. Set a goal to pay at least 20% down for a new car and 10% for a used car. With that much as your downpayment, you can also qualify for lower interest rates and better terms for your auto loan.
When you settle on a downpayment goal, put money aside every month and keep saving until your reach the ideal amount.
Stay Within Your Budget
Looking for a new car can be exciting! The latest model of your dream car with all the bells and whistles can be fun to test drive and fall in love with. While dreaming isn't a bad thing, make sure your stay within your budget.
If all of the bells and whistles push the price of a car beyond your estimated downpayment and monthly affordability, it's not the right time for your dream vehicle. Buying a car that exceeds what you can afford when added to your monthly bills can lead to defaulting on your car payment and ruining your credit. If you can't pay for the car once you drive it off the lot, you put the vehicle at risk of being repossessed by your lender.
"Some" car is better than "no" car and bad credit! Set your budget and stick to it.
Check the VIN
State and federal lemon laws are in place to protect consumers from cars and dealerships that sell cars with issues beyond repair. While the laws generally apply to used vehicles, new car "lemons" are possible.
Lemons can include factory defects for new or used cars. When considering a used car, a lemon can be a car that suffered damage before a dealer repaired it and put it on their lot. After taking possession of the car, things begin to go wrong, and repeated attempts to fix them aren't successful.
What Should You Know About a Car's History?
Knowing how to buy a new car includes understanding the information you need to know you're making a good purchase. Before turning over any money for a downpayment and finalizing the financing and paperwork, check the vehicle's VIN (Vehicle Identification Number) to receive a history report.
A report can tell you:
- If the car is registered as a stolen vehicle
- Accident history
- Past odometer readings
- If the vehicle was a prior rental or taxi
- About any damage the dealer didn't disclose
- Photos from a prior sale of the vehicle
With this information, you'll understand if the dealership presented the car accurately and if you're about to drive a car off the lot that has more damage than you thought. You'll also know if the price for the vehicle is too high considering its history.
A VIN Decoder report is a valuable tool to protect you from purchasing a bad car. You don't want to risk the money you saved for a new car on a vehicle that's a potential lemon.
Buy When the Time Is Right
Unless you need a new car right away, wait for the right time to buy. The best time for a new vehicle is when you have your personal finance and savings in place. When you've accomplished that goal, look for sales, special offers, and incentives for the car you have your eye on.
Car dealerships offer specials during holidays, for outdated models before a new design hits the lots, and at the end of the year. Additional savings can help you stretch your downpayment and lower your monthly note!
Buy a New Car With the Right Information
Never skip the research! Buy a new car with a VIN Decoder report from EpicVIN. Click here to run the numbers and make sure your new car budget goes to a worthy vehicle!
