Are you about to splurge and buy yourself a new car? The one that you’ve been looking at in the showroom window these past few months? The latest luxury top of the line model?
Well, there is good news and bad news for you. Let’s get the bad news over with first. The price of that car has gone up quite bit since you first inquired back in March.
The good news is that the car loan market has eased somewhat since then as well. So you will probably come out square in the long run. What all this really means is that you will have to invest a bit of time and energy in planning your loan strategy.
A typical auto loan lasts about five years. However, there are some companies that offer shorter or longer terms. If you wanted to reduce the loan period to three to four years instead of five, it will be possible. Why would you want to that? The answer is simple, it will save money.
Car loans work like this: the longer the loan period, the more it will incur in interest charges. So this is one easy way to save on costs when getting into an auto loan contract for auto purchase.
There is another car loan strategy that is very effective. Without thinking about the car you want to buy, do an exercise to see how much you can afford to pay back every month on the loan. Once you have that figure, convert it back to the total amount of the loan you will take. To that, add the cash you have saved for the new car. Now you know the total you have to spend.
Now examine the car market and see what suits your needs – size, power, accommodation, etc. Once you have done that you are ready to buy. Do a tour of the showrooms and see what’s available. Check out the fancy stuff like the accessories, colors, upholstery and suchlike
Now it’s loan time. Make your down-payment, or as much of it as you calculated at budget time. The down-payment asked for by the dealers is usually 20% to 30% of total vehicle cost. Of course the greater the down-payment, the lower your monthly repayments will be.
Soon everything will be done. Enjoy your new car and drive it safely!