Your Dream Car Without the Nightmare Debt
We all want the perfect car to show off when we are driving around or going to work. Unfortunately, our dream cars may be out of reach due to costs or other considerations such as its useability. Planning for your car purchase (or any significant purchase) provides a better chance of successfully buying what you want without crippling debt.
We are all concerned about debt and finding a car loan but there is such a thing as good debt and bad debt. Good debt is something that either appreciates in value (perhaps a house) or something that you really need like a vehicle. There are some key steps to follow when considering upgrading your car or purchasing your first one:
- Commit to a Savings Plan – If you save regularly before and after you purchase your new car, you can have money put aside to reduce your debt burden.
- Borrow Wisely – Do not be afraid to take out car loans and have a little debt but make sure you get the right advice and loan products suited to your needs.
- Think Long Term – Buying a dream car can save you money in the long term as you will be less likely to get rid of it for another model or make.
Why Should You Save to Borrow?
Any amount of money you save towards a new car will reduce the amount you have to borrow. It also provides back up resources for when you have to make repayments on your loan but cash flow is tight. You may have heard parents or grandparents talking about saving for a rainy day and you and your children should get into the same habit.
Seek Wisdom When Wanting Loans
Yes, being a bit more patient and well informed will definitely save you money when borrowing. Do not limit this to professional consultants but also ask friends and family about their own experiences borrowing and repaying loans. Parents are a great source of information and you can learn a lot from other people’s borrowing mistakes.
Remember that you are definitely not the first to have borrowed money! Brothers or sisters may have gone before you on purchasing that first car. You may have your own experience you can draw on for this dream purchase.
A good mechanic can also give you some great advice before you borrow on a lemon.
The Long and Winding Road
If you purchase your ‘dream car’ then be absolutely positive it is a medium to long term purchase. Cars can depreciate a lot in value once used so it is important to get your money’s worth before selling or trading in. Unless it is a collectible car, it is unlikely that your car will start to be worth more money especially with those extra kilometres on the dial.
Be careful when choosing your perfect car as emotions can often get the best of you. Remember, some car dealers take advantage of that and will use the ‘I want it now’ effect to get your money. Always take a deep breath before you purchase and look at a few different dealers before making up your mind up.
