Smart Borrower Center
Tools to help you borrow better
One of your first major purchases when you start your financial independence might be buying your first car. It can be exciting to look at makes and models and decide on options and features, but don’t lose sight of the fact that you will most likely be making a significant financial commitment.
Aside from the actual car, you are going to need to make some major decisions.
New or used?
First, should you get a new or used car? To answer that, you need to consider your income, your knowledge of maintenance and the duration for which you plan to keep the car. You will also need to keep in mind specific features you want and whether you look at a car as an investment. If you have a large income, want a fully loaded car and regard a car as a status symbol, then you might find that buying a new car is right for you. If you aren’t too picky about features, and you don’t look at a car as a considerable means for getting a return on your investment when you sell it, you might be in the market for you a used car.
Paying for your first car
Next you will have to decide how to pay for the car. If you have a considerable amount of money in savings that you can use to pay the full amount, you can avoid interest rates and financing charges. But if your old car unexpectedly died, you may only have enough money for a down payment. Be sure to shop around for the best terms and interest rate; often you can do better than the dealership. Remember to keep the term as short as possible, so you don’t end up paying for your first car long after you’ve sold it.
Insurance
Also keep in mind that you will need some kind of car insurance to protect you from accidents, weather damage and theft. You should shop around for the right insurance just as you shopped for the car and the loan. Compare prices and find the deal that is most attractive to you and your financial situation.
Published on December 16, 2006