You can’t exactly figure out what you can and can’t afford just by looking at your bank account balance. There are always other fees, such as insurance and extra features, that are difficult to calculate before you get your quote. You should always be looking to get the best deal possible; you can get a free dealer invoice report from Car Cost Canada to find a great new car deals in Canada. Here are some factors you should consider when deciding whether or not you can afford a new car:
Getting the Best Deals for a New Car
- The down payment
The down payment is often the biggest challenge in purchasing a new car. You can figure out how big a down payment you should pay using any of the numerous free online calculators. Once you’ve determined how much you can afford, and how much you would be comfortable paying every month, you can start looking for deals to help you save money. Car Cost Canada provides free dealer invoice reports so that you see how much the dealer paid for the car you’re considering purchasing, and how much money you can save.
- Financing/Leasing: Can you afford it?
Financing is sometimes a necessity, but it comes at a cost. If you can, you should look to saving up for a few years and buying a car outright with cash, instead of financing it. It will prove to be cheaper in the long run. Debt is a heavy burden, and you’ll always be better off without it.
Another option that car buyers are faced with is leasing. A car will depreciate in value immediately after you buy it, but leasing is essentially paying towards a car you will never own. Whether you should lease or not depends on whether you would prefer to own your car for the next 20 years, or whether you’d rather exchange it with a newer model after just a few years.
- Your savings
Figuring out how big your down payment is, and/or how much you’re going to be paying every month is the easy part of the process. Once you’ve done that, you need to start saving, and you need to start as soon as possible. Calculate how much you need, and when you want it by, and make automatic deposits into your savings, so you can reach your goal on time.
Putting away a chunk of your hard earned money is a challenge, but sacrificing certain luxuries for the benefit of a smaller loan is absolutely worth it. Your new car is going to feel all the better to drive without the burden of debt.
- The emergency fund
Emergency expenses popping up at the least convenient times is a burden that comes with car ownership. You need an emergency fund. Even after you reach your goals for down payments or monthly payments, it’s recommended you keep saving, up to $10,000, into an emergency fund, to deal with the unexpected challenges that come with owning a car.
- Why do you need or want this car?
What do you need the new car for? Some people need a car to get around the city a few times a week for chores, while others commute for over an hour everyday to get to work. Look for a car that fits your needs (size-wise, fuel, and economy-wise), at an appropriate price range.
A final tip: get a free report at CarCostCanada.com, and go into the dealership fully equipt for negotiation. Check out our other post on leveraging a deal to learn more.