Buying a brand new car is exciting, but it’s also a huge decision. Most likely, you’ll need to obtain a loan for your car, which means you’ll need to be able to make monthly payments. You also need to be able to afford regular maintenance, fuel, and insurance expenses for your new ride. So, before you sign the loan papers and drive away in your brand new car, you need to consider a few things.
Should You Buy or Lease?
Unless you have tax reasons for leasing a car, it’s almost always better to purchase a car outright. When you purchase a car you know the terms of the loan upfront, and if properly maintained you can get years of use out of your car after the loan is paid off. Whereas if you lease a car you have to abide by the lease terms, and continually easing cars means that you’ll always have a car payment to make.
Shop Around for Financing
Don’t assume that the car loan the dealer will obtain for you is always the best deal. Talk to your bank or local credit unions about the types of car loans that they offer before you go to the car dealership. Your regular bank or local credit union might offer you a better interest rate, which not only means you’ll pay less over the duration of the loan, but that your payments will be less as well.
Obtain Gap Insurance
Brand new cars depreciate as soon as you drive them off of the car lot. Because of this, there is a gap between the amount of money that you owe on your car loan and the amount of money your car is actually worth. This means, if you have a total loss, you’ll end up paying the bank for a car that you no longer have. Most auto insurance companies offer gap coverage to protect you if you total your new car. Gap insurance will pay off the difference between what your car is worth and what you owe the bank if your new car is totaled.
Buying a new car doesn’t need to be stressful. In fact, it should be an exciting time for you. So, don’t let the details overwhelm you. Instead, research the cars that you’re interested in at a local dealer, such as Peterborough Chrysler Jeep Dodge, talk to your bank about financing, and talk to your insurance company about the cost of coverage before you go to the car dealership. This way, you’re prepared to make an educated decision.