You may want to consider whether the time is right for you to buy a new car. Is this the time in your life where you want or need to make a big purchase like this? Have you saved up enough money? Are there any other bills that need paying off as well? Do you have a comfortable job offer lined up at your dream company? These are just a few of the considerations when wondering should I buy a car right now. Read on for more…
Should I Buy a Car Right Now
It’s always important when making any purchase that it be an informed decision. Sit down with pen and paper and do some math before going ahead with your plan.
Here are six reasons why now is a good time to buy a car.
1. You Have a Good Credit Score
The truth is the better your credit score the better the deal you will get on a new car or truck. The dealer will give you a lower interest rate.
This in turn will reduce your monthly payments and you will spend less over the term of the auto loan.
And when I say less, I mean thousands of dollars less.
2. You Have the Cash You Need
When buying a new or used vehicle, you will need to have a down payment.
Experts say you should put down at least 20 percent of the purchase price.
That means if you want to buy a $25,000 dollar car you will need to have $5,000 dollars available for the down payment.
Make sure you have enough savings to cover the down payment.
You will also lower your car payments which once again means you will pay less over the term of the loan.
While this seems like a lot of money, financing will be easier to obtain.
Consumers that don’t have a 20 percent down payment may even be charged a higher interest rate.
3. You Can Afford the Payments Comfortably
You should have a good idea of your current debt and income. You know what your bills are and you know how much money you can afford each month for a car payment.
With this knowledge, you can determine whether or not you can afford a new car or truck.
Too often the dealer will talk you into a more expensive vehicle and the excitement will take over and you’ll drive off the lot with a car you can’t afford.
So, make sure you can make your payments and stick to your plan.
You don’t want a car payment that will make it difficult to meet your other obligations. That’s a great way to get yourself into serious financial trouble.
4. You Don’t Have a Lot of Debt
Before you buy your car, be sure you don’t already have a lot of debt.
This can include student loans, personal loans, credit card debt, and your mortgage.
If you have a lot of debt it will be difficult to get financing in the first place, and if you do get it, you will have a higher interest rate.
So, if you don’t have a lot of debt, then it might be an excellent time to get a new car.
5. You Have Job Security
Most credit unions or banks or any lender for that matter will want to see that you have worked at your current job for at least a year and maybe two.
Before you add the debt of a new car to your life, be sure that you have a stable job that will last.
You don’t want to be out of work and have a car payment.
6. You’ve Done Your Research
You don’t want to walk on a dealership lot and not know what you should be paying for a car or what options you want.
If you haven’t done your research you will have to rely on what the salesperson tells you. You may or may not get advice that is in your best interest.
Having a little knowledge about the car industry or at the very least the car you want to buy will end up saving you money.
Customers can be taken advantage of and customers that don’t know anything about cars can really be taken advantage of.
6 Reasons Why it is a Bad Time to Buy a Car
Now might not be the time to run out and get a new car.
Here are six reasons you should wait.
1. You Have a Bad Credit Score
If your credit score isn’t great, you might want to hold off on buying a car at this period of time.
If your score is really bad, you might not be able to buy a car at all. If it is just not great, you’ll be able to buy one, but it will cost you more as you will have to pay a much higher interest rate.
Forget the 1 percent interest rates you see on TV.
You can expect to pay 10, 15, or even 19 percent interest rates depending on how bad your credit is.
2. You Don’t Have Enough for a 20 Percent Down Payment
If you are short of cash, wait to buy a vehicle.
Yes, you can buy one with less than a 20 percent down payment, but it’s not a great idea to do so.
Your monthly payment will be higher. You will be financing more of the sales price and that means over the term of the loan you will pay a lot more for the car.
Instead, see if you can wait on the new purchase and save up more money before you buy.
3. You’ll Have a Hard Time Making Your Payments
If buying a new car is going to make it difficult to cover all of your payments and monthly expenses then don’t buy one.
If you’re living month-to-month, it is too easy for an emergency or a job loss to push you over the cliff financially speaking.
You might miss one car payment and then one becomes two and before you know it, your new car is repossessed.
Even if you can technically afford a new car, don’t buy one if you will have trouble paying for it.
4. You Have a Lot of Debt
This really goes hand-in-hand with number three.
If you have a lot of debt, get some of it paid off before you buy a new car. This is especially true if you have high-interest credit card debt.
Get this paid off first.
Your life will be easier and less stressful.
Also, you will have an easier time getting financing for your new vehicle.
5. Your Current Car is Paid Off
If you already have a car and it is paid off and runs well, then keep it.
I understand the lure of a new car. I’d love one myself, but every month you can keep your old car the more money you can save.
My car has been paid off for several years now and I’ve been itching to get a new one, but I love not having a car payment even more.
Keep the old car and put the money you would spend on a monthly payment into savings. That way when you do buy you can pay for most if not all of the car.
If your current car is breaking down all the time then you might want to get a new one.
The rule of thumb is if the repairs of your car equal 50 percent of its value it is time to get a new one.
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6. Your Job Isn’t Secure
If you worry that you might lose your job, get laid off, or you’ve had issues at work, then don’t buy a new car.
Wait until your work situation stabilizes then go for it.
Again, you don’t want to buy a car, lose your job, and then lose your car.
It will make it even more difficult to buy another one.
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To Sum it All Up:
Now might be a great time to buy a new car or it might not be. If you can secure financing and make your payments, then the car-buying process will be a breeze and you should get better auto loan rates. If on the other hand, if you don’t have the money for a good downpayment, the loan terms you receive might not be great. Also if your credit history isn’t great, you could pay more for the vehicle.
Take the time to understand your personal situation and then decide if now is the time for you to buy a vehicle.