Can You Really Afford This Car?
You first notice its shiny exterior and heavy duty tires from across the street. You drive over to take a closer look. The features. The styling. The MPG. It’s exactly what you’ve been looking for since you started your search for a new car.
But wait! There’s more. Not only is this the car of your dreams, but it’s ON SALE. Today and today only! The manager is going to cut you a special deal, but you gotta sign by 5pm. Tick tock. Tick…tock.
You hurriedly sign into your online checking, consider how much your perfectly good car would be worth as a trade-in, and the next thing you know, you’re driving off the lot in a shiny-brand-new-all-the-top-features-KBB.com-awarded-car of your dreams. (And your low credit score? Your manager just said there’d be some higher fees. But what’s a few higher fees when the love of your life is waiting on the other side of his cubicle?)
If we all had our way, that’s where the story would stop: driving off into the sunset, without a care in the world.
But as we all know, not all new car purchases have a happy ending. Even new cars are known to have defects and costly recalls, and with that new, “today only!” sticker price comes new insurance premiums, maybe a higher fuel bill, and, more likely than not, a higher monthly statement. It’s not called an “impulse buy” for no reason.
We’ve all been seduced by the allure of a new car before. It seems our unique curse as Americans—the automobile has been our destiny for over a century now, and companies like Tesla are just pushing us into new frontiers of automotive awakenings. But no matter how good the deal may seem the moment, whether or not you can afford that new car over the long haul is a totally different issue.
Ask To See the Numbers
If you’re considering buying a new car purchase, it’s imperative that you understand your financing terms and options before you take a step onto any dealership. Talk with your local bank first, to find out how much they’d finance you for, and at what rate. For many car buyers, the quest to buy a brand new car stops short at their local bank or credit union, once they realize how much their credit is jeopardizing any chance they have to own a new car.
If you’re someone who struggles with bad credit, the absolute worst thing you can do is commit to a new car deal, with dealership financing, only to turn around and surrender the vehicle a few months into your loan. In many cases, what you’ll have done is put yourself “upside down” in your loan (meaning you owe more on the car than it’s worth), and dealers who specialize in bad credit financing won’t be able to help.
Be Realistic About What You Can Afford
If we’ve said it once, we’ve said it a thousand times: be honest about your budget and your finances, especially when you’re trying to make a large life purchase. Know your limits, and shoot to purchase something under them. Give yourself a cushion. Don’t go all-in. Life, as Ferris Buehler says, comes at you fast.
By preparing yourself weeks or months in advance of your vehicle purchase, you set yourself up to buy something that’s within reason for your current circumstances, and avoiding future heartbreak. After all, it’s you—not the repo man—who’s supposed to be driving off into the sunset in this story.