Tag Archive for Buying a car

4 Signs It’s Time to Trade-In Your Car

4 Signs It's Time to Trade-In Your Car

4 Signs It's Time to Trade-In Your CarCars are expensive. Between the purchase price, the interest you pay on your loan, and the maintenance costs along the way, there is nothing cheap about owning a vehicle. With that said, most people don?t have a choice on this purchase.

Unless you live in a big city and can rely on public transportation, you likely need to own a vehicle. By making the best possible financial decisions with regard to your cars, you can make the best of this costly part of life.

One of the key decisions you need to make as a car owner is determining when to trade your vehicle in on a new (or newer) model. How do you know when the time is right? Consider the four tips below.

1. Your Vehicle No Longer Meets Your Needs

Sometimes, the decision to trade-in your car won?t have much to do with finances at all. For example, if you are currently driving a vehicle that no longer meets the needs of your family, it will be time to make a change.

This is common for people who have children. A sedan or crossover that worked for the family when the kids were young might soon start to feel crowded. If you need to move into a larger model, trading in your current car before it completely runs out of value is probably your best bet.

2. The Repairs Are Adding Up

When you seem to be taking your vehicle to the shop more than you are taking it to work or anywhere else, it may be time to ?cut bait? and move on. Depending on what is actually wrong with the vehicle, you might still get a decent return on your trade-in.

Upgrading to a new vehicle in this situation will save you from the cost of those ongoing repairs, and it will also save you the hassle of those visits to the shop.

3. You Need Better Mileage

Gas mileage is another factor to keep in mind as part of this debate. If you drive a significant number of miles each day for work, trading-in your current car for a model with better gas mileage could lead to major savings.

The cost of fuel for a daily commute can add up quickly when driving a vehicle that burns gas at a high rate. There are many fuel-efficient models on the market today, so it may not be hard (or even expensive) to trade-in your car for the purpose of fuel savings.

4. It Fits Your Budget

If you are doing a good job of tracking your budget, it should be relatively easy to find an opportunity to trade-in your car. Remember, you?ll probably need some money for a down payment ? in addition to the money you receive for your trade-in.

So, you?ll want to make sure the funds are available when you get ready to make a purchase. As long as you time it right, it?s possible to move into a new vehicle without sending your budget too far off course.

 

How often do you trade-in your car? What factors do you consider?

 

Photo courtesy of: Nino Ubezio

5 Ways to Avoid Debt When You Buy Your Kid a Car

buy your kid a car

buy your kid a carDeciding to buy your kid a car is a highly gratifying experience. You certainly want to help your children get off to a great start as they head toward adult life, and purchasing them a vehicle is a perfect way to do just that.

No matter what they are setting out to accomplish, it is likely that they?ll need a set of wheels to be successful.

With that said, you don?t want to send yourself deep into debt just to purchase a vehicle for your child. To make this dream come true without paying too much interest along the way, we have outlined five tips below.

1. Buy a Cheap Car!

This might be an obvious point, but it is where this list needs to start. Simply put, you don?t need to purchase a top-of-the-line vehicle right off the dealer lot.

Most teen drivers get started in a used car, and there is nothing wrong with following that trend. The main goal here, obviously, is to find something that is both reliable and safe. As long as the vehicle checks those two boxes, it doesn?t matter if it?s not the prettiest thing on the road.

2. Work Together to Save

If your child has picked up a part-time job, or if they have the time in their schedule to do so, consider creating a plan to buy the car together. Shop the used car ads to find a suitable vehicle and take note of its price.

That price will then become your target, and you can work together to save up the money to purchase that vehicle (or a similar one) with cash. For example, you could offer to match each dollar that your child is able to save, until you have enough money to buy the car.

3. Be a Co-Signer

For cases where your child is making an income but doesn?t have the credit to actually buy a car, you may be able to act as a co-signer in order to close the deal.

This way, you don?t wind up taking on the debt of the loan, but your child is able to make the purchase. Of course, you would be in line to deal with the debt if your child defaults, so have honest conversations about the serious nature of taking on debt.

4. Pass on a Family Vehicle

If you have been thinking about purchasing a new vehicle for yourself or your spouse, consider passing down the old family vehicle to your child. This way, you aren?t taking on an extra payment ? you are just replacing your old payment with a new one, and keeping the old car in the family. This won?t always work, however, as you may not have paid off the old vehicle, or it might not be in good enough condition for the job.

5. Don?t Do It

This one might sound harsh, but hear me out. While it is a generous thing to buy your kid a car, it may not necessarily be in their best interest.

It is important for young people to understand the importance and value of money, and that lesson might go missing if they are simply handed the keys to a quality vehicle. Think carefully about the message you will be sending, and the personality of your child, before deciding how to proceed.

 

Did you buy your kid a car? Did you go into debt to do it?

 

Photo courtesy of: State Farm

How to Budget for Your First Car

How to Budget for Your First Car

How to Budget for Your First CarAcquiring your first car is a big step in your financial life. Most likely, your first car is going to be a used model, but that doesn?t matter. What?s important is that you are able to pay for it, and that it can get you around town successfully from day to day.

Of course, you don?t want to get in over your head from a financial perspective on this purchase. Overspending on your car could mean you have to get rid of it shortly after you pick it out. To avoid that outcome, check out these tips to help you budget for your first car.

Thinking Monthly

The first thing to consider is how money you can afford to spend on a monthly basis for your first car. Figure out how much money you make each month. Then add up how much of that money is already spoken for with other expenses.

Of course, you want to be able to save some money at the end of the month as well, so don?t be tempted to push your budget right on up to the max. Once you have picked out a number that you are comfortable with for your monthly expenditure on this purchase, you can then move on to the next step in budgeting for your first car.

Don?t Forget Insurance

Making the payments on your first car will be the biggest part of your?expense. But don?t forget about insurance as a part of the puzzle. The insurance premium that you need to pay each month is going to depend on a number of factors, including your driving history, the value of the vehicle, and more. Before you finalize the purchase of any car, make sure you research the cost of the insurance in order to get a clear picture of your total costs.

Buy or Lease

You have two options when you are going to acquire a car for the first time. You can buy the car (new or used), or you can lease it. Each option has advantages and disadvantages, so you will want to think about which one makes the most sense in your case.

Most leases have relatively tight mileage restrictions, so leasing might not be a good option if you tend to drive a lot of miles. Purchasing a car is usually seen as the better way to spend your money, but there are situations in which a lease makes more sense.

Plan for Maintenance Costs

One of the hidden expenses associated with owning a car is having routine maintenance performed on a periodic basis. You will need to change the oil from time to time based on the manufacturers recommendations. There will also be other costs such as tires, brakes, and more.

While these aren?t going to be expenses that you will incur every month, they should be considered. They are going to be part of the overall cost of operating the vehicle. You don?t want your car to become a point of stress within your budget, so think about these maintenance costs while you are building out your budget for this exciting purchase.

 

When did you get your first car? Can you think?anything else that should be included in the budget for your first car?

 

Photo courtesy of: State Farm

3 Ways to Save on Your Next Car Loan

car loan

car loanMost people need to take out a loan when purchasing a car. There is no shame in that, of course ? cars cost tens of thousands of dollars, and very few of us have that kind of money just laying around. Fortunately, car loans usually come with very reasonable terms and a relatively short repayment time frame. If you care for your car properly, you should be able to continue driving it long after the loan has been satisfied, hopefully giving you time to save up money for you next car so you can avoid taking out a car loan next time.

Of course, even though car loans are fairly affordable in terms of interest rates and terms, you still want to save as much money as possible when making this large purchase. Keep these three tips in mind before you walk onto the dealership lot ready to make a deal on your next car loan.

Skip Some Options

You don?t need to buy a ?fully loaded? vehicle in order to be happy with your purchase. Many of the base model modern cars still include everything you need, such as automatic windows and locks, automatic transmission, safety features and more. As you move up into the higher end options, you can start to spend a lot of money on things like upgraded upholstery, a fancy stereo, and other technology.

In order to pick out the right car and right package for you, focus more on your budget than the options you have in front of you at the lot. Establish a price range for your purchase before you ever head out to buy the vehicle, and keep the final sale within that range no matter what. This can save you thousands on your car loan. But don’t skip features if they are truly important to you. For instance, you could get a car GPS?from China to save money and still have that feature in your vehicle.

Save for a Down Payment

The math is simple ? any money that you are able to put down on the purchase of your vehicle is money that won?t have to be borrowed in your car loan. If you can save up prior to making the purchase in order to have a significant down payment available, you will be able to greatly reduce the size of your car loan, and reduce the amount of interest you pay over the long run.

It is often possible to buy a vehicle with a very small down payment, or even no down payment at all, but you should try to avoid this strategy if possible.

Shop Around in Advance

Before you even head out to shop for a new vehicle, do some work on finding your financing ahead of time. You can likely apply for a car loan approval through your bank before you go shopping, which will give you a great idea of what you can afford and what your monthly payments are going to look like based on the interest rate and loan size.

While you might end up financing the purchase of your car through the dealership rather than your bank, it is nice to have that approval in your back pocket when it comes time to negotiate. If the dealer won?t give you terms that you like, you can always point to your bank offer as another financing option.

 

Have you ever taken out a car loan? Do you have any other tips to help save on a car loan?

 

Photo courtesy of: kaboompics

3 Things to Consider Before Buying a New Car

buying a new car

buying a new carIf you are spending more on car repairs than you budgeted for and have an older model car, it could be time to upgrade to a new model. But with so many different makes, models and price points, where do you start when you are thinking about buying a new car?

Before you rush right out and buy the first car you see on the lot, there are at least three things you should consider before buying a?new car.

Your Budget

If you have money set aside for a down payment, you have a good start already. Of course, it’s best to pay for cars in cash since they are a depreciating asset, but that may not always be possible. Talk to your banker before you start your vehicle search if you are going to need to finance the balance of your purchase.

They can help you determine how much of a loan payment you can reasonably absorb into your budget. Although, you should also have done your own calculation first because sometimes bankers will try to talk you into spending, and financing, more than necessary when you are buying a new car.

Depreciation

How long you plan to keep your new car should be a consideration when you first start looking for one. As mentioned, a car is a depreciating asset. The value of a car depreciates around 20 percent each year on average, with some models depreciating faster or slower than others than others.

For example, if you purchase a car for $40,000, at the end of one year it?s worth approximately $32,000, and at the end of year two, only $25,600.

This rate of depreciation continues for the first four years after you buy a new car, partly due to the auto industry’s tendency to redesign each model every four to five years. In fact, a new car?s price drops approximately 10% the moment you drive it off the lot. This is because the dealer would not be willing to pay the same amount for your car if you had to sell it back to them right after you bought it.

So, what drives the rate of depreciation? It?s partly driven by the number of miles you put on your car. Other factors are the color of your car and the customizations is has, because the more unique a car is the more likely it won?t appeal to just any buyer.

If resale values are of any concern to you, you will get the most out of your car if you keep it longer. Check the Kelly Blue Book value before you think about buying a new car to find out which models depreciate at a slower rate.

Features

Obviously certain features in a car will cost you more than others, so if you know ahead of time which features are more important than others for your needs, you can avoid wasting time looking at cars?that don?t fit the bill. For instance, a big, shiny, 4-wheel drive pick-up with a long box looks cool, but if you don?t need 4-wheel drive or an oversized truck bed for hauling things,?why pay for those more expensive features when you could opt for a 2-wheel drive with a short box or an entirely different type of vehicle instead.

Plus, the bigger the car the more gas it’ll use too, so it’ll cost you more up-front and in the long-run.

The bottom line is that buying a new car is going to cost you a bundle. In order to get the most for your money, it pays to remember these things before looking at or buying a new car.

 

Are you considering buying a new car? What things do you consider when shopping for a new car?

 

Photo courtesy of: aKs_phOtOs