Looking for a new vehicle? Let us help you pave the way to financial success.
Whether you’re buying your first vehicle or your fifth, purchasing a new or new-to-you vehicle is not a small decision. There are hundreds of vehicles to choose from, with many customizable options.
It’s important to make vehicle financing one of the first steps in your car buying process; you want to find the best rate and budget for your monthly payment before you start shopping. It’s important to plan ahead considering the average length of a vehicle loan was over 5 years in 2017!
Would a gently used vehicle versus a brand new vehicle be a wiser financial choice? On average, a new vehicle depreciates by 10% as soon as you drive it off the lot! Here, we offer a few financial considerations to make while shopping for your next vehicle.
What are your needs and wants?
Make a list of your needs, wants, and must-haves. A four-wheel drive may be a need for Midwest winters, whereas a powerful air conditioner may be more necessary elsewhere. These will likely increase the purchase price but will also provide additional value.
What can you afford?
While some consumers may be able to pay in cash, many need to take out a loan to finance the cost. You’ll want to plan to have a cash down payment as well as factor in the trade-in value of your current vehicle. Use our payment calculator to see what your monthly payment might be, depending on the amount and rate.
What interest rates and terms do you qualify for?
You will generally get the lowest rate when you choose a loan with a shorter term. You’ll want to shop around for the best interest rate. Remember that the sooner you’re able to pay off your loan, the more you’ll save on interest charges.
For example, when borrowing $20,000 at 5% for 5 years, you’ll pay over $2,600 in interest over the life of the loan. The same loan at 3% would cost you just over $1,500 in interest. Better yet, if you are able to pay the loan off in 3 years at 3%, your interest would total just over $900.
What does regular maintenance look like for your ideal vehicle?
Be sure to include maintenance costs, such as new tires and regular oil changes, as part of your research when you are planning to purchase a new vehicle. It’s also worth researching the cost of replacement parts; this can vary greatly depending on the vehicle.
How much will you pay for insurance?
Some vehicles are more expensive to insure than others. It would be a good idea to talk with your insurance agent to discuss possible premiums and cost-saving features your new vehicle may offer.
 Bloomberg Businessweek July 5th, 2017 U.S. Average Auto Loan Length Balloons to All-Time High