How to Avoid Buying a Car That’s Over Your Budget
Okay, so you have a plan. You’re going to head down to the dealership, get the car of your dreams with a low monthly payment, and craft an epic tweet about your new purchase before noon.
But oh man, you just didn’t realize how many awesome models you were going to see on the lots of used car dealerships in Rhode Island. Maybe you could up your payment just a bit, just a teeny bit.
Your palms are sweaty and your heart is racing. Surely it would be worth it to get behind the wheel of that sweet little coupe with the snazzy red paint job.
Now here is where things get sticky. You can absolutely agree to a hypothetical monthly payment that would leave you eating Ramen for the next five years.
However, that payment isn’t hypothetical anymore after you sign on the dotted line. So slow down for a minute. Going beyond your budget can be a super tempting option when you’re surrounded by shiny new vehicles.
But you don’t want to end up sacrificing other enjoyable parts of your lifestyle. You shouldn’t have to eliminate new clothes every once in a while and appetizers with your colleagues after work on Fridays.
If you rewind and make a plan ahead of time, you can get a fantastic car and walk out of the dealership feeling confident that your financing is in sync with your social life.
Set your price cap in advance and stick to it.
When you start car shopping, you need to have a concrete idea of what you can afford. Do you have a monthly car payment now?
If so, is it a stretch or does it fit alright into your financial picture? If you don’t currently have one, how are you going to allocate money for the expense of a new vehicle?
You need to know exactly how high you can go, and you need to be ready to pull the plug if suggested vehicle prices start to go above that.
And don’t forget about all the other factors that come into play such as registration and insurance. They add up.
Remember to stick to your guns and don’t let yourself veer off track. Your price cap has to be final.
Get pre-approved for a car loan.
As part of your planning process, talk to lenders and look into getting pre-approved for a loan. Then you’ll have an idea of whether your self-determined spending limit aligns with how much financing you can get.
Are you going to be able to get a loan for the amount you thought? Do you need to save up more for a down payment?
It’s extremely smart to have a handle on your own finances before you start negotiating at a dealership.
Bring a friend with you.
If you think you might stray and go for something with a price sticker that’s just a tad too flashy, recruit a good friend to shop with you.
You’ll have a fun day together testing out seat comfort levels, and having another person with you will be a good reminder to follow your plan.
It feels a lot better when you have a great new ride and a bit of cash still in your pocket.