By: Jocelyn Wood | Category: Financial Services | Issue: May 2017
Keep your car buying costs as low as possible.
Buying a car is a major purchase. Budgets are tight. It’s tempting to accept financing based on the lowest monthly payment, but don’t. Here’s why.
Lower monthly payments often mean longer loan terms and higher interest rates. You may be able to obtain 84-month term (7 year) financing and a budget-friendly monthly payment, but you’ll pay more over the life of the loan. You also risk becoming upside down on your loan, owing more money for your car than it is worth.
“Don’t be payment-driven,” says Kelly Ailey, lender, RCB Bank. “Save up as much as you can and negotiate the sales price down, not the monthly payment.”
To keep your car buying costs as low as possible, Ailey offers these tips.
Avoid the payment-driven temptation and start saving up now for your next vehicle. In the meantime, explore your financing options and ask your banker what you can do to improve your credit score.
One final piece of advice Ailey offers: “Don’t be afraid to walk off the lot.”
“Don’t rush your decision and accept the first offer,” Ailey said. “It’s your money and your life. Be good to yourself.”
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