Congrats on your decision to buy a car. Buying a car is one of the biggest financial decision you will be taking and it is important that you find the right car for your budget.
Establish the Budget
One of the first things that you need to do is to establish the budget. The budget determines whether you can buy a new or used car. You need to determine how much you can afford each month for the payment.
Be realistic about the budget. The general rule is that the amount of money that you pay to buy a car should not exceed 20% of your monthly salary. Avoid overextending yourself as it can create financial problems in the future.
Identify the Car You Need
Depending on your budget identify the car you will need. You need to take this important decision based on how much you drive daily, parking space and terrain you drive.
After you have identified a list of brands and car models you are interested in you need to do adequate research about them. This can help you see whether they fit your budget and match your expectations.
Determine the Cost of Ownership
The cost of ownership includes running costs, fuel consumption, depreciation, insurance, maintenance and repairs. You will need to pay a higher insurance for cars that depreciate fast.
Get Financing Approved
Before you start negotiating with the dealer it is best to get financing approved. This can help you gain an upper hand in the negotiation process.
Most dealers offer incentives on buying a car. Check the incentives listed on the dealer’s website and ensure that you get them.
Schedule a test drive. If you are satisfied with the car and all the terms of the dealer, you can go ahead and complete the buying process.