Vehicle Loans

Welcome to your Financial Fitness Minute. Getting ready to buy a car.

When you think of buying a car, your first thoughts are likely about the size, gas mileage, color, and that new-car smell, but, to make sure you drive away happy, remember the three major financial elements of car buying.

First, be clear on what you can afford. Look at your budget to see what monthly payment you can handle, bearing in mind any changes you may have in insurance, maintenance, and fuel costs. Plug your ideal monthly payment into an online car-buying calculator to find out how much of a car you can afford, taking projected trade-in value, or down-payment money into account.

Compare that to the car you want by checking the Kelley Blue Book website, or Edmunds.com, to see what the true retail cost is. Can you afford it? Consider whether there are any incentives, or rebates that can help bring the car into your price range. If the price is still too high, can you do without some of the upgrade packages, or look for something a bit more reasonable for you?

Second, tackle the financing. If you have any problems with your credit report, resolve them so you can get the best interest rate possible. It’ll save you lots of money in the long run. Check first with your local financial institution to get your financing in hand, before you actually go to buy the car. It’s still a good idea to see what kind of deal you might get from a dealership, so you can make a comparison. Don’t just look at the monthly payment, though. Consider the total cost of the loan.

Third, handle your trade-in. Do your research to find out what your old car is truly worth. If the dealer doesn’t want to offer what the car is worth, as a trade-in, you may just want to sell it on the private market, through Craigslist, or an auto-trader site, and use that cash as a larger down-payment.

Thanks for joining us for this Financial Fitness Minute.