Car Financing: It’s a Journey! Plan wisely.
Thinking of buying a car?
For lots of Canadians, owning and driving a car is a necessity. After a house, a car purchase may be the biggest purchase of your life! Car buying comes with many decisions: What color car do I want? Should I get a four-wheel drive? Do I want to drive an automatic or standard transmission? Are convertibles still cool?
You should also be thinking of your present and future finances when buying a car. Car financing is a journey! Like any big trip you take, you should plan wisely. Here is a simple road map. Let us at Credit Counselling Sudbury help make your journey smooth and successful!
(This blog is brought to you in partnership with our friends at the Financial Consumer Agency of Canada. They have amazing resources that can help you make the important decisions you should be thinking about before you plan to make your big purchase and drive off in your new set of wheels.)
Create a budget and live by it!
Whether you buy a car or lease it first, car payments are going to be a major expense for you. Be sure you are committing to payments that fit your personal budget! There are various things to consider on top of the price of your car that you will need to spend money on. These include:
– Regular car loans versus lease payments
– Ongoing costs: fuel, maintenance, insurance (a must!), parking
– Other fees: taxes, licensing and registration fees
Explore all possible financing options.
Purchasing a car isn’t simply a decision between buying a car outright or taking out a loan to pay off the car little by little. There are many financing options you should think about! For example, you can get a car loan through a car dealer or through a financial institution. You may also choose to lease a car instead! Leasing is akin to a long-term rental option, while obtaining a car loan means you have decided to buy the car.
Know what “depreciation” and “negative equity” mean.
“Depreciation” and “negative equity”, when it comes to auto investments, involve cars losing their value. What happens when you still owe money on your car loan, but your car is worth less than the money you owe? When making your car financing plan, be sure to think about these things and what they mean for your personal financial situation!
Watch out for long-term car loan risks!
Long-term car loans are agreements to pay for your car in six years (72 months) or more. Though these loans are becoming increasingly popular for new car purchasers, think before you enter into a long-term agreement! There are many pros and cons associated with these loans to consider. For example, long-term loans do help you manage your car loan payment more easily, but a lot can change in your life in the span of six years! In the future, you may need a different type of car than you have now to transport a larger family, for example.
Here’s a short clip explaining what may happen if you take out a long-term car loan: https://www.youtube.com/watch?v=A2NunPLAEpU
Enjoy the journey, and let us help make it a smooth one.
Financing a car is a journey, and we at Credit Counselling Sudbury want to help you make it a smooth and successful one. Contact us today to find out how to get free, unbiased, and confidential financial advice on how to plan for one of the biggest purchases of your life!