The year is nearly over and everyone is looking forward to 2021! Many people have resolutions and goals for the New Year, such as saving up enough money to buy their dream car or truck. No matter what your price range is, it’s essential to set a solid budget and stick to it. AMVIC encourages consumers to set and stick to a new budget resolution before you shop for your next vehicle.
A budget will help ensure you don’t spend money on extras you don’t need or never considered to begin with. It will also ensure you don’t get into financial trouble or be swayed to sign a contract that gives you buyer’s remorse.
Here are some budgeting tips to keep you focused and on track:
- Think about what type of vehicle will best meet your needs.
- Do you want to buy or lease?
- Will you require financing and where will you get it from? Remember interest rates can vary significantly.
- Establish non-negotiable requirements that you need from the vehicle such as passenger capacity or fuel economy to prevent you from buying a vehicle you didn’t want to begin with.
- Decide beforehand if you are going to accept or decline offers to purchase aftermarket options, protection packages, extended warranties, life insurance and security etching.
- Always focus on the total price first. A longer term loan to get a low monthly payment may allow access to a more expensive vehicle, but consider whether the total price of the vehicle including the cost of credit is truly affordable.
- Trading in a vehicle? Do you know what negative equity is?
Keep your New Year’s resolution and don’t blow your vehicle purchasing budget next year! There are more budgeting tools such as the “six steps in budgeting” consumer guide and many other resources available on amvic.org.