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What to Know When Buying a Car

What to Know When Buying a Car

August 30, 2021

While getting a new car can be exciting, the process of buying a new car can also be stressful. There are many steps in the car buying process, especially when it comes to the financial aspect. There are a few important things to know when buying a car, continue reading to learn more. 

Know Your Rate 

If you are financing your car, you need to know what interest rate you have been approved for before you step foot into the dealership. You can choose to finance through a bank or through the dealership. Having your approved loan terms makes the financing process easier and makes sure that you get the lowest rate that you are approved for. 

What Impacts Your Payment         

You need to have an understanding of what can make your monthly payment higher or lower. The interest rate has a small effect on your monthly payment. A large factor in your payment amount is your down payment. The more money you put down in cash up front, the lower your loan amount, the lower your monthly payment. The length of your loan also determines your monthly payment. The longer the loan term, the lower the monthly payment. A loan may end up costing you more in the long run.

Is New or Used Better for You? 

While a new car may be nice, a new car immediately depreciates in value the second you drive off the lot. A used car may be cheaper, but it could have higher maintenance and repair costs because it is an older vehicle. It completely depends on your situation, what type of car you want, and what you are open to spending over the car’s lifetime. Be sure to decide what works best for you before you go to the dealership. 

Understand the Difference Between a Loan and a Lease 

A loan is used when you purchase a car and have full ownership rights. A lease is used when you are basically renting the car. When you own a vehicle, you pay the entire cost of the car, fully own it, and pay for all the repairs no matter your usage. When you lease a vehicle, you pay the financing costs while you have the car in your possession. If you are deciding whether to buy or lease, consider how many miles you would put on a vehicle, how much you upkeep a car, and if you are expecting major life changes. 

Before buying a car, understand the process, the financing terms you are comfortable with, and what type of car will work best for you. Here at LifeBridge, we want to help you make good financial decisions. If you need any help with the car buying process, give us a call.