(FinancialHealth.net) – Considering a big-ticket purchase like a car? Halt in the name of sensible financial decisions! Before you move forward, you must understand how to shop for and/or finance a car in a way that makes sense for your budget. Car dealerships are notorious for milking people and bluffing about the actual condition of the vehicles held in their lot; don’t get caught up in their drama. Whether you’re purchasing from a private seller or a dealer, this article will let you get set up for a perfect sale well in advance.
Skip Dealer Financing
Many people make this common but unnecessary mistake: financing through the dealer. While some dealers certainly do offer amazing interest rates and excellent financing fees, those that do are few and far between. Remember: when you finance through a dealer you are most likely really financing through a third party organization the business partners with. It’s not unusual to see the name of a major American financing company or bank at the top of your papers before you sign. Unless your dealer has his or her own finance company, it’s the only way to offer you credit.
Instead, skip the middle-man and go right to your regular bank. You’ll get a better interest rate if approved, and will skip the nasty high fees in the process. Better still, you’ll own your vehicle outright; the dealer can’t repossess it if you fail a payment. It’s much easier to work with your bank on payment snafus than a dealer.
New Isn’t Necessarily Better
It seems logical at first; buy a new car and it should theoretically last longer than a used vehicle…right?
In practice, this is unfortunately false (especially given that standards aren’t the same as they once were). While your new vehicle – may – last longer than a used version, the investment-to-benefit ratio is actually quite poor. Vehicles depreciate most heavily in the first three to five years, and most people find themselves purchasing a new vehicle every five to 10 years. So if you’re purchasing a new vehicle each time, your money is effectively depreciating faster than if you purchased a well-maintained used vehicle every four or five years instead.
The caveat to this argument is that it’s vital to choose a used vehicle you can trust that comes with at least some warranty against problems. Stick with vehicles that are less than seven years old for the best results. And if all else fails, take a mechanic buddy along with you and demand outright honesty before you buy.
~Here’s to Your Financial Health!
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