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Updated on Thursday, January 28, 2016
Ah, to own a car. Let’s be honest — public transportation has its draws (the fact that we don’t have to worry about doing the actual driving, the environment, and all of that), but when it comes to convenience, nothing can beat your own set of wheels.
But can you afford your own set of wheels? This year we at MagnifyMoney want to make things as easy for you as possible, so we’ll walk you through the steps you should take prior to walking on that car lot to ensure that you’ll be driving away with the car that’s right (and affordable) for you.
1. Start with your budget
As with most financial decisions in life, the choice to buy a car should start with your current budget. Do you have leftover cash each month — or room to cut back on current expenses — so that you can make car payments each month? Starting with your monthly income will help you determine whether or not you can afford taking out a loan for a shiny new car (or even for a used one), or if buying something pre-owned and less expensive is the way to go. And remember — buying the car is just your first step. After you own it you’ll be in charge of paying for repairs, gas, insurance and more, all things you’ll need to factor into your current budget, as well.
If you need a little more help deciding whether an auto loan is right for you, check out this piece about where to find the best places to look for auto refinance companies..
2. Figure out your financing
If you’ll be going with a used car this year and paying for it in cash, in full, then you may need to figure out a timeline for when you’d like to purchase the car and try to break up your monthly savings to meet that monetary goal in time. If you’ll be purchasing a new car with a loan, though, you’ll want to do some shopping around. As with most loans, the better your credit score, the better your financing options will be. Online auto loans are a quick and popular way to get financing for your new car, but you’ll want to shop around. For example, check out this piece about the five best auto loans for a new car, or this one for the best loans for a used car. (P.S. You’ll also want to avoid the sub-prime auto trap at all costs … we can help you.)
Once you’ve figured out financing and know how much car you actually can afford, it’s time to head into step 3, the fun step …
3. Research your car
Are you interested in only American cars? Do you need all-wheel drive? What about those fancy add-ons like a sunroof, heated seats or satellite capabilities — how important are they to you? And safety reports — that’s got to factor in too, right? Start with the Kelley Blue Book to price out some of the vehicles you’re interested in, and then ask around for what people who have cars you’re interested in paid. A little research ahead of time will really help you when it comes time to head into step 4.
4. Negotiate like a pro
Once you’ve narrowed your list to a few car options and have a general idea of what you can (and should) pay, it’s time to shop. It should come as no surprise to you that negotiation is the name of the game when it comes to purchasing a car. Start with the fact that you’ve done your research and know how much the car is actually worth, be polite and don’t be afraid to walk away at first and come back if need be. Following up when the salesman is unlikely to make another sale for the day (and therefore would really appreciate yours!) is also a good idea, like on a weekend right before closing. If you can, you should also try purchasing your car at the end of the month or even the end of the year, when dealers are trying to move as much inventory as possible to make room for their new stock and are more likely to cut you a deal to do so.
A lot goes into the decision of buying a new car, and a little research can really help a lot. If you’re still unsure of what your next move should be, check out this piece on what questions to ask yourself on how to score a car that you can afford and that you will love..