Shopping for a new ride is always exciting, especially if you plan to take home the car of your dreams. You’ve likely envisioned yourself many times behind the wheel of whatever car you fancy, and the thought of actually driving it is priceless. However, your dream car can come at a price.
Unless you don’t have any other expenses to worry about, you need to get doubly smart with money. That means you can’t get carried away and buy a car you can’t afford. But if you’re still considering buying your dream car, there are a few ways you can finance your vehicle.
Here are some car financing tips to help you get off on the right foot.
1. Be Realistic
Buying a car is a commitment, so many want to get the one they dream of. However, this dream car must fall within the available budget.
It’s best to account for several factors money-wise to determine the budget at your disposal. These considerations include your salary, outstanding debts and bills, and what’s left of your disposable income. Taking these into account gives you a clear picture of what car you can afford.
Remember that when you buy a new car, the expenses are not limited to the purchase price. You’ll have to shell out for gas and insurance, too. Unless you know car maintenance, you must also allot money for when the car requires tuneup. These expenses add up. And the best way to budget for your car needs is to allocate 15% of your monthly income to cover the costs.
2. Save Up
There’s no better feeling than buying your dream car in cash. So, if you have saved enough money for the purchase, then you can purchase away. If that scenario does not apply to you, don’t fret. Give yourself time to save up.
You can fast-track the process by being conscious of your expenses. It’s best to separate needs and wants. As much as you can, deprive yourself of the latter. Imagine yourself behind the wheel of your dream car to make saying no to a cup of Starbucks coffee easier.
3. Get a Side Gig
Why settle with just one source of income when you can diversify? Come up with side hustle ideas that align with your talents and skill set. For example, if you’re passionate about writing, you can apply for freelance jobs related to that skill. If you’re proficient in Photoshop, start accepting design commissions. You can even pursue a side career as a virtual assistant where you can fully use your type A personality.
These side hustles will accelerate saving up for your dream car. Before you know it, you will have enough money to purchase your dream vehicle with cash or at least enough for the down payment.
4. Research
Car prices vary between dealerships, and in some cases, they may depend on the location. Prices may even fluctuate based on the time of year. Researching these discrepancies is the best way to know where and when to purchase your vehicle. You can refer to websites like Vroom, Edmunds, and CarMax to help you in your deliberations.
5. Explore Ways to Lower the Purchase Price
The most convenient way to lower the purchase price of your dream car is by trading in your old car. The amount you’ll get to slash off the original price will depend on the state of the ride you want to retire. If your car’s as fit as a fiddle—with no issues from the engine to the car battery—expect a favorable appraisal.
Another way to lower the purchase price is to say no to options and accessories you don’t need. Anticipate that the dealer will try to sell you everything they can. But remember, you don’t have to say yes to heated seats or other unnecessary offers.
6. Consider Alternatives
If you want to drive your dream car without owning it, leasing is a worthy option. You rent a car for as long as specified in the contract. However, ensure you read the fine print thoroughly and look for stipulations such as penalties you may need to pay should you end the contract prematurely.
Another alternative worth considering is buying a used vehicle. If the car of your dreams is quite expensive, you can do a shortcut with a more affordable pre-loved ride. People won’t know the difference, especially if you tune the car up like a pro.
7. Mind Your Credit Score
If you are planning to apply for a car loan, the first order of business is to improve your credit score. Banks will refer to it when deciding whether to approve your loan.
There are some ways to improve your credit score. But the best way to do so is by paying all your debts on time, such as your credit card bills and other loans, should you have any.
8. Borrow Wisely
If you want to finance your dream car via a loan, keep in mind that you have several options. It’s best to compare and contrast the choices at your disposal, so you end up with the best deal. For example, you can compare each lender’s interest rates, as it can help you decide whether you can afford the loan.
The go-to option for many is a bank loan. The application is straightforward enough, and some banks even allow purely online processing. However, as mentioned earlier, you’ll need a good enough credit score.
If you are a credit union member, you may opt for a credit union loan. Usually, this type of loan offers competitive interest rates and flexible payment terms, not to mention low-cost car insurance.
You can also use a credit card to purchase your dream car if that’s something your credit limit will allow.
Buying Your Dream Car Realistically
You work hard but live life to the fullest. It’s high time you retire your old car that can’t keep up with your lifestyle.
Or perhaps you’re a first-time car buyer and have big plans for the future. If so, you deserve a ride that’ll take you places.
When buying a new car, you’ll want to get the one in your dreams. And you can go for it but make sure you practice the right financing tips that consider your needs. Remember that the car expenses don’t end with the purchase. You’ll also need to pay for maintenance, gas, and other car needs. So, make it a point to continue working hard. That way, you can also afford your dream car’s needs.
