Borrowing with smarts (part 2)

Automobile Purchases

For the majority of the people in the US, a car is a basic form of transportation. So an automobile falls into the category of basic necessities. Unfortunately, automobiles seem to have a limited life, even though they are not cheap to but. So planning for a new automobile replacement is definitely a good idea.

The right auto for your needs

When buying an automobile, you should be looking for a vehicle that meets your transportation needs. Think about your driving and how a vehicle would best suit your specific needs. If you have young children, you would want to look at automobiles that fit your needs for space. If you live alone and commute a lot, you want o search for fuel efficiency. Just be able to think along these lines when saving for your impending car replacement. Always think of safety and economical value. Unless you have a lot of money to burn, you don’t want a huge gas guzzling SUV. You want to shop your style as well. Do not buy a car you are going to hate driving in. Save for what you can afford and but what you can afford too.

Whether you are looking at new or used cars, be sure to know the model’s safety record and consumer ratings ahead of time. Buy magazines that rate cars just before you get ready to purchase. Shop a good price for sure. Make sure the car you may be interested in has affordable maintenance costs too. Consumer Reports is a great place to compare cars. Check your local bookstore for the latest copy.

Always remember that the cost of purchasing your car is just the start, you have to be able to afford the gas, upkeep and insurance. Check with your insurance agency before you by a car to get a quote in order to se if you can afford the insurance - especially if you are looking at that red sports car!

Pricing

Whether you are buying or leasing, you need to negotiate the price of your automobile. In order to do this in the most effective manner, you have to do some homework. Again, Consumer Reports is a great tool for rating vehicles on just about every level and subject. By reading the fact sheets about how much cars retail and wholesale, you will be able to know what the dealer paid for the car and haggle for a better price.

Price is a very important number when buying a car. Other considerations are trade in value on your existing car, down payment on new purchase, and financing terms.

Leasing

Even if you are leasing the car, you need to know the price. When you lease, you pay for the use of the car for a certain time period, with interest. The use is the reduction in value from the original price to the value at the end of the lease, based on a certain amount of wear and tear.

With a least, you want to agree on what the vehicle is worth at the beginning of the lease and what it will be worth at the end of the lease. The dealer is making those assumptions, even if they are not discussed with you. Be certain that you completely understand this and you get it in writing ahead of the contract signing.

When you lease, the dealer will also set limitations and conditions on your lease agreement as far as wear and tear are concerned. Obviously you have to fix the car if it incurs any damage, you have a certain amount of miles on your lease agreement and things like that. You have to consider if this is the best for you.

The dealer is not obligated to tell you the interest rate figured into lease payments. Never sign a lease until an independent party calculates the rate for you based on vehicle purchase price. Monthly payments, lease duration and the value at the end of the lease. Be aware of high rates here!

Before you consider a lease, be certain that you can abide by the mileage restrictions for sure. If you do not, you will be penalized at turn in and this is not cheap.

There are many different aspects to buying versus leasing. Consider the pros and cons to each before you decide one way or the other. Borrowing with smarts takes time when it comes to cars. After all, there are so many cars and so many dealers out there. Read up on the styles of cars you find that you are interested in before and you will be a step ahead of the game.

Saving for an impending car purchase is not always easy, but if you put away enough for a sizeable down payment, you will be able to lower you monthly payments. Also consider the term periods when purchasing. Never take a 6 year loan. If you have to, this is a red flag. Instead, buy a car that you can afford the payments one for 4 years. With all the different loan periods these days, it is easy to get sucked into a 6 year loan just to drive the car of you dreams when you really have no business doing so. But we will get into this on the next section.

Be sure to read on to out next section of this debt free article about borrowing with smarts as it will cover car finances in more detail.

Part 3…Automobile Financing

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