Jenny’s Tips For Financing a Car

This is highly discouraged because it is important to focus on investing rather than buying debt. That is my professional opinion, but I think that often, we are financing vehicles. I think it is important to brainstorm the needs that you have for your vehicle and start from there. It is so easy to get carried away with your wants but that can end up putting you out of your affordability range. Next, would be to analyze your finances and see what you can afford. How much do you have coming in each month versus how much do you have going out including the extras like clothes, food, gas and so on. Try to put down as much as you can in order to keep the monthly payment down. A car is only worth what it can give you because it is not an investment so avoid making irrational decisions. The higher the car payment the less you are saving and investing. Be aware that we are at an all-time record high for financed vehicles right now of about $890 billion dollars. 

When you go to look for a vehicle: 

1. Don’t be afraid to look at the used cars   
2. Plan to walk away when negotiating the price  
3. Do research the vehicle you need  
4. Look at pre-financing options (interest rates you qualify for at your bank and credit unions) 
5. Buy based on purchase price rather than monthly payments  
6. Factor in car insurance, repairs, and maintenance. Something to also consider is many vehicles are all-wheel drive. This requires all new tires if one was to get a flat or need to be replaced for whatever reason. How often and likely is it that AWD is needed? Check the cost of all new tires before making a purchase. These are the kind of maintenance questions that you will need to consider.  
7. Keep the add-ons to a minimum unless you plan to pay for them in cash up front 
8. Always test drive the car 
9. Don’t mention your trade-in.  
10. If you have a loan on the vehicle you are replacing, carefully consider what that is going to do. It will be rolling into your new loan which may put you at risk. This will automatically put you upside down on the new car because as soon as you drive it off the lot, it depreciates compounding the problem.
    

Here is a tip, try to get the longest terms so your monthly payment is low and pay more each month to pay it off early. This allows you flexibility in case you were to lose your job or cannot make large payments each month but be diligent in paying more each month. Also, check that the loan does not have a penalty for paying off early. Most don’t but checking is a good idea.  

We hope for a happy and smooth purchasing process for you and Congratulations! 

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