Buying a car outright is a seriously expensive purchase that not many people can afford. If you are looking to buy a new car, like most people do nowadays, you can finance your car over a period of months or years which helps you spread out the cost. This is often referred to as lease-to-buy by car dealerships and manufacturers. This system helps people acquire a new, trustworthy vehicle without a high down payment at the beginning. Nevertheless, although this seems like a perfect system, there are some downsides and considerations to make when planning to finance your new car. In this blog, you will find expert advice on all the ups and downs of financing a new car.
The Financial Plan: Monthly Installments
If you are looking to finance a car, the first thing to consider is the affordability of the vehicle you want. Depending on the overall pricing of the car, the monthly payment breakdowns can be between £150 and £1000 – sometimes less and sometimes more – which of course is a huge range of affordability options. This also depends on the brand – for example, Audi Motability cars offer their own financial planning system which is designed to draw in customers.
Calculate the interest and VAT charges
Some companies will charge low prices, but build up the interest over the years you pay for the car. This means that in actual fact, you’ll be paying more for a low price financing option than you think. Ensure you read all the small print and calculate your exact payment amounts, including VAT and interest. Don’t be sweet-talked by a salesman into signing a contract you have not read in full.
Don't forget other car maintenance costs
Remember, your monthly car payments are not the only thing you will be paying for when it comes to your car. If you are budgeting for your first car, these considerations are particularly important. The car’s gas mileage, for example, will determine whether your fuel costs are affordable or not; likewise, calculate your insurance costs, repairs and general maintenance of your vehicle before you decide to buy.
Is the car right for your family?
If you are considering financing a car, it is tempting to pick the cheapest, most affordable plan you can find. But is the car right for you? Consider your family – how many people will be traveling in the car on a regular basis? – and other needs such as the road quality of your area, off-road driving, long-distance journeys and driver comfort. These will all help determine how suitable the car actually is for your lifestyle, not just for your wallet.
Financing a car is a great option that most people opt for. Just make sure you keep the above points in mind – get a car that suits your budget and your lifestyle!