You go about your daily life making snap decisions, from where to get lunch to what route to drive, and so on. Once in a while you prepare to make a decision that requires a bit of saving and therefore planning, like buying a vehicle. For first-time buyers it can be a little tricky since they have no previous experience to draw from.
As exciting as the prospect of buying your first vehicle is, don’t lose sight of what’s important. Sticking to what you can afford, safety and reliability are good priorities and probably pretty close to your own. Don’t let yourself get side-tracked by focusing on the audio system or whether the paint is ‘Cigar Black,’ ‘Jewel Black’ or ‘Phantom Black.’ Those things should by no means determine your choice of vehicle.
Table of contents
Here are some important aspects of the buying process that you should prepare for to ensure a smooth transaction.
Building your Budget
The word budget seems to have a negative effect on people. They’re scared of it because setting a budget means delving deep into your finances and taking a good, hard look. You may learn that your financial circumstances are less than ideal (maybe way less), but on they flip side they could be better than you thought!
There are plenty of online resources and calculators available to help you plan yours. However, there are factors in addition to the vehicle price that you’ll need to build into your budget. Consider the long terms costs of owning and running a vehicle:
- Price of gas
- Regular maintenance
- Seasonal tires and change
- License and registration fees
By accounting for these extra costs, that you might not normally consider when determining your budget, it will prevent you from drowning in unforeseen expenses later. In turn, you won’t fall behind in payments and will keep on top of your debts.
The best thing about this is that making your payments on time will help improve your credit score!
Know what you can Spend Monthly
You might be thinking that his is the same as setting a budget, but it’s not. Your loan payment also factors in additional monthly commitments. Whether that is paying back your college loan, rent, and/or any other expenses; add them all up.
Determine how much money you are taking home each month, subtract your savings, any automatic deductions and pre-determined expenses. The amount you are left with is a rough estimate of how much you can pay monthly. Again, these are merely an example, which can change greatly depending on your unique position.
If you have the funds available, a down payment is a good idea. Your loan amount will be smaller and your interest rate will be lower, therefore your monthly payments will be more manageable.
Find the Right Car
Now that you’ve worked out how much you can afford to spend you can start researching vehicles. You won’t need to decide on the make, model and year; the main idea is to identify the type. By ‘type’ we mean sedan, compact, minivan, SUV or truck.
To determine the best fit for you consider how many passengers you will transport, whether you will use it for towing, whether it will be used to commute or not, how much trunk space you require, etc… Think hard about your lifestyle over the past few months and about how, when or why you needed a car. This should give you an excellent starting place.
Gather your Documentation
You’re almost ready to pick up your vehicle! The final step is to arrange your documents and head over to the dealership. Most will require that you present a provincial driver’s license and proof of insurance – but you shouldn’t be driving without them, so that won’t be a problem. If you have past pay stubs and last year’s income tax return, bring them, too. They are excellent proof of your income that the financing department can use to setup a loan for you.
- Driver’s license
- Proof of Insurance
- Income tax return
As you can see, buying a vehicle isn’t an intimidating process. You likely have everything you need on-hand, with the exception of your financing plan. That’s where CarLoans411.ca comes in. No matter what situation you are in, whether you’ve got good credit, bad credit or no credit, or if banks have turned you down – we have the experience and resources to get you into a vehicle. We take the headache and stress out of worry about the money so you can enjoy the process, because buying a vehicle should be fun!