Car Loans and Insurance: How Much Is Too Much?

Getting a new car is an exciting event. You can pick out the features and style that you want and replace an old, unreliable vehicle with a new one with a warranty. However, it is very easy, with today's high-pressure sales tactics, to buy a car that is too expensive for you to afford the payments or whose insurance bills will be beyond your means. According to USA Today, the average price for a new car is now more than $31,000. How can you avoid getting into a bad financing situation and find a car that fits your means?

New or Used?

The biggest decision, and one of the first, that you must make is whether you are going to look for a brand-new vehicle or a used vehicle. New vehicles have the benefit of having never having had an owner, but used vehicles generally cost much less. Many people compromise and buy a vehicle that has been turned in after a year or so on a lease to keep their purchase costs low since a car theoretically loses most of its value in the first two years of ownership. However, this also means that the car will be worthless if the new owner attempts to trade it in or sell it later.

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Options and Decisions

Today's cars come with a variety of options including expensive technology, bigger and better interiors, and even premium tires and rims. The price of these options can add significantly to the price of a vehicle, so it is important to choose carefully in order to stay within a purchasing budget for a vehicle. Some options are more expensive to purchase with the car from the dealer that they would be to buy "aftermarket" from another vendor.

To Lease or Not To Lease: Car Financing Options

Most people cannot pay cash for a new vehicle, so one of the first decisions a car buyer has to make is whether to buy or lease your vehicle. Both financing options have advantages and disadvantages. It is important to weigh the options to choose the right type of financing for a new vehicle. In general, leasing is less expensive per month but ultimately costs you more to own the car, so leaders tend to keep leasing.

Insurance: The Hidden Cost

If there is one cost that people often forget when buying a new car, it is car insurance. Car insurance rates can easily double if a buyer purchases a new SUV by trading in an old sedan. Therefore, it is important to get a quote for insurance before making a final decision on a vehicle.

Making it all Work: Creating a Car-Buying Budget

You can avoid being swept away by the new-car-buying experience by creating a car-buying budget before you ever step on the lot. Whether you lease or buy, a budget is essential.

Start with your monthly income and subtract the cost of your rent, food, and other expenses. Be honest about your spending needs. What you have left over is what you can afford for a car payment.

Do a little research before heading to the car lot. Find out which cars are available in your price range and which offer the features you want, as well as the true value of your own vehicle if you are going to trade in. Finally, call and ask about insurance costs for the vehicles you have narrowed down. Armed with this knowledge, you will be better able to handle high-pressure sales tactics and get the right vehicle for your needs and budget.

This article was written by Vito Sanchez, a car enthusiast who hopes to help you become a better car owner. He writes this on behalf of Stevens Transport, your number one choice when looking for the best transport companies out there. Check out their website today and see how they can help you!