Buying a car today is a lot easier and more convenient than it used to be. You can even purchase a car online and have it delivered right to your driveway. But although the car buying process is simpler, it does not guarantee the best terms. In fact, you may end up paying more for your new car than its actual value.
Before buying a new vehicle, you should ask yourself about the following issues:
- Status of current car loan – If you have an existing car loan, what is its status? You may not be approved for a new car loan if you are tied up with another loan. If you are denied, you will either have to sell your other car and pay off the balance to the financing company or trade it in, with the car dealer assuming the payments. Your situation may be problematic if the trade-in or resale value of your current car is not enough to cover the remaining balance of your car loan.
- Interest rates on car loans – If you are going to buy a new car, you need to find out the current interest rates for car financing. The rates will vary depending on the length of the loan you choose and your credit score.
- Manufacturer offers and rebates – Some car dealerships offer incentives to new car buyers. They might offer lower sticker prices and rebates or lower interest rates. You should ask yourself which perk will be most beneficial to you in the long run. While a lower sticker price might sound enticing, it might be accompanied by a higher interest rate, so do the math carefully.
You should also determine how important it is to you to purchase a brand new car. There are very good slightly used cars on the market that are priced a lot lower than brand new models. It is an open secret in the car industry that the value of a vehicle diminishes drastically after two years. Consider that a two-year old car is almost new and still covered by the manufacturer’s warranty.