Car Financing Items People Tend to Forget
Car Financing Items People Tend to Forget
A car is not only a considerable investment but also a personal decision. Sometimes it can be difficult to separate your emotions from where you are in the car buying process which can lead you to doing something irresponsible. Whether you’re a first-time buyer or haven’t bought a car sinceBill Clinton was in office, here’s a list of things to remember to avoid putting yourself in a negative financial situation.
Acquiring Your Loan
For the majority of people, buying a car outright with cash isn’t an option. There’s nothing wrong with getting a loan if you can afford it. It helps you build credit and is worth it for the time value of the money(spreading out payments instead of a lump sum). A 0% APR loan is your golden goose but isn’t always feasible. When you can, get pre-approved for a loan so that you know going into the process exactly what you are able to afford. This gives you a specific number that will prevent you from jumping the gun and agreeing to pay more than you can stomach. It’s a way to create a safety net.
HiddenCosts of the Car
Unfortunately, even after getting a loan for that new car you’re not done paying for it. Your car comes with expenses. These go beyond repair costs. A short list of these include: vehicle registration fees, title fees, license fees, documentation fees, compliance fees, emissions testing fees, floor plan fees, and others to name just a few. These all depend on the type of vehicle you have as well as the state you live in. Buying a car in another state besides Arizona can pose some issues as well.
In general, people are more aware of repair costs. You can estimate a number for these items, but you really can’t predict them perfectly. A flat tire or even something extraneous such as your air conditioning failing can add up. Again, just the sticker price and the value of your loan aren’t enough to estimate how much you’ll be spending.
Affording the insurance
But wait there’s more! Even after getting pre-approved for your loan, calculating the various fees that occur with your car and its repair costs, you still need insurance. Sometimes when we see the price tag of a car, we get sidetracked and anchor to that specific number. Car insurance is a necessary expense and needs to be factored in. If you are pulled over without insurance in Arizona, you are given a $500 fine and a suspension of your license and registration. These penalties amplify if it happens again within 36months.
However, these fines are in place as a way to prevent you from being responsible for much larger costs. An accident can leave you footing the bill for not only repairs, but costly medical expenses. Driving without insurance is a horrible idea.
So, you might be making enough money now to finally get that brand-new sports car you’ve always dreamed of, but that premium engine can come with a higher insurance rate. It can feel unfair but certain cars have different insurance rates. This isn’t always dependent on the power of your vehicle. For instance, a sports car can have a higher insurance rate because it enables more reckless driving, but even a more “tame” car can have a higher insurance rate due to its propensity for being stolen or being unsafe. You’ll have to investigate how your rates will change based on the vehicle you are looking for. Some insurance companies provide opportunities for you to lower your rates so look into those as well. For example, if you have a younger member of your family using the vehicle you can sometimes receive lower rates if their performance in school is above a certain level.It’s a way to show that they are responsible.
These are all factors that should come into play when considering buying a new car. It’s important to have a plan when buying something so expensive and important to your life. You should purchase a car that you enjoy but also makes sense for your budget. In taking into account not only the car itself, but repair costs and fees, as well as insurance costs you should be getting a better picture of what you have. As with most financial planning, knowing where you stand and being aware of the actual cost of the vehicle and how it fits into your life is critical in maintaining a solid budget. Do your due diligence and see where you can squeeze a couple dollars here and there. It all adds up and there are many opportunities to save when you look for them.