Thinking of buying a new car? Not without these financial tips.
Regardless of its type, model, and cost, purchasing a new car is an exciting experience. But, without the right guidance, this excitement can quickly wear off.
That’s because many people are unaware of the hidden fees when it comes to buying. Oftentimes, these fees lead to a bigger-than-expected price tag that leaves people disappointed.
To prevent this from happening to you, we’ve outlined five common financial mistakes that people make when buying a new car. That way, the final price tag doesn’t put a damper on your experience.
1. Focusing on Monthly Payments Vs. Total Cost
Although a low monthly rate might seem attractive on the surface, when you look deeper at it, this low rate could mean the total car cost is higher in the long run. That’s because it might not include any additional fees or charges on the vehicle such as the interest rate or the length of the loan. So, to prevent a costly surprise, be sure to question what the total cost of the car will be instead of just the monthly payment. That way, you can account for all the hidden fees and avoid a surprise.
2. Not Negotiating
It can be intimidating to negotiate the price of a vehicle, especially if you think you’re already getting a good deal on it. But, it’s important to question the price tag and talk to associates to see if there’s any wiggle room on the price. Simply asking the question might be able to get you a dollar or percentage off of the cost.
3. Avoiding a Preapproval
It’s a good idea to get pre-approved before shopping around for a new vehicle. Simply knowing how much you were pre-approved for can give you the ability to negotiate more when shopping around. This is because you can freely go to dealerships and compare their offers without having to rely on a single place. In turn, enabling you to ask questions and see if lenders can match offers or make a better deal.
4. Picking a Long Loan Length
Many people are attracted to a long loan term because it often results in them having lower monthly payments. But, the longer the term, the more interest you could be racking up for each month the balance is carried over. So, before you decide which lender to use, be sure to do the math on the interest and payment schedule to determine if a longer term is actually beneficial.
5. Buying Extras
Add-ons and fancy features could sound nice in the immediate future, but getting suckered into these extras can drastically change the cost of a vehicle. Oftentimes, dealers will try to upsell during the purchase process so be wary of what they offer. Reminder, if it ‘sounds too good to be true’, chances are it probably is.
Therefore, anything that is offered above and beyond the standard should be carefully considered and accounted for before agreeing to purchase.
Ultimately, regardless of what vehicle you end up with, purchasing a new car is a big investment. That’s why we suggest speaking with a financial professional to determine what makes the most sense for you.
If you’re thinking of purchasing a car and would like to know what terms are right for you give us a call at 407-328-5001.
Otherwise, failing to take precautions, shop around, and educate yourself on your options can get you in serious financial trouble.
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