When it’s clear what the utility of this vehicle will bring into your life, you can now proceed to determine your budget and how you plan to finance the purchase.
First, you have to compute the expected cost of owning a vehicle, which includes additional factors, such as a budget for insurance, maintenance, and repair costs. Then, you can determine whether you are financially able to or want to buy the car upfront in cash. While this is a great way to avoid interest rates and even get discounts, this can hurt your cash flow and your spending capacity.
Second, it’s best to inform yourself of financing terms, such as secured or unsecured loans. If you are qualified for a secured auto loan, you have to be able to offer collateral, which lenders can repossess if you’re unable to meet the payments.
Third, you can decide if you want to lease your car instead, which lets you use it for a period of time without owning it. While this doesn’t sound sexy at first, leasing means you can drive a flashier car or change it more frequently at a relatively lower payment plan and with overall lower maintenance costs.
However, leasing your car comes with a few rules, including staying below certain mileage limits and paying early termination fees. So, it’s best to consider leasing primarily if you don’t use your car that often or want to stay flexible in case of sudden lifestyle changes.
