Budgeting Car Financial Deals
While it’s exciting to browse through used car purveyors, especially with the intention of purchasing one, it’s often tricky when it comes to the finance side. It’s easy to overstretch your budget and end up with something that you can’t actually afford. With car financing, which is by far the most commonplace method to purchase a car, there are also some costs that should be budgeted into your used car purchase. So, how do you actually budget for a car?
Nowadays, it’s much easier to know how much room you have to work with when it comes to financing a car thanks to online calculators. Many websites do provide this, including ours, Garston Motors at any vehicle’s landing page. It’s a very simple and intuitive, yet helpful utility that can swiftly estimate your monthly payment, and it scales properly with the payment period, interest rate and down payment. This will be your best friend when it comes to financing a used car.
Of course, that’s not all there is to a car purchase. You have the monthly payment amount, but what does it mean? Commonly, finance institutes or car loans lenders recommend you to only spend about 15 to 20 percent of your gross monthly wage on your vehicle, and this rule of thumb will help you to set aside a rough portion of your money so you can start shopping.
If you can, it’s beneficial for you to be able to come up with a sum as down payment. Down payment is an upfront payment that will cut down on your future monthly payments, and can help you score a more favorable interest rate. Of course, having a good credit score can also do the talking for you, and it’s more likely that you can negotiate a lower interest rate with it.
When you finance a used car, you will be bound to a contract for years, therefore it’s also important to know what you actually need. Ensure that the car that you’re looking for matches preferentially with your plan. A pragmatic 5-door hatchback is always a robust option, but when you’re planning to have a few kids, perhaps look for a safe SUV or MPV, so you’re prepared when your kids bring their friends along.
Afterwards, you need to realize that purchasing a used car isn’t all about the purchase itself. The ownership that follows is going to demand more from your bank account, so ensure that you brace for that. Reserve a backup in your bank account for emergency major repairs, and another amount for wear and tear items and services. While that Mercedes-Benz or BMW may look nice, the bitter truth is that you won’t be able to afford it if you can only just barely make the monthly payment, let alone the maintenance costs. There are online tools and studies that can aid you in the decision. A dependable car may cost more upfront, but it’s worth the trouble if you want a smooth ownership.
Finally, if you already own a car and don’t intend on keeping it, trading-in is a valid option. Trade-ins can provide you with more breathing space in cutting down your down payment. A car just being kept around will become a financial burden even if it’s not driven, so don’t be afraid of getting a car trade-in appraisal and taking the evaluation into account.
Budgeting for anything can be tedious, but for something as financially sizable as a car purchase, it’s worth spending as much time as possible on it. If you’re still uncertain as to how much you want to spend on a car, and what car is truly for your purpose, don’t be afraid to visit our Cambridge Ontario used car dealership to inquire.