The Biggest Financial Mistakes People Make When Buying a Car

The Biggest Financial Mistakes People Make When Buying a Car

Buying a used or new car is a big investment. But it's not only the price of the vehicle that needs to be considered. There are also interest rates and monthly payments, spread out over how long the loan is for to take into consideration.

There are several pitfalls that are common to many car buyers. Be careful of these:

Loan length.  Dealerships  will  give  you  a  startlingly  good  monthly payment  if  you  extend  the  loan  to  60  or  70  months.  This is a bad mistake. Why do they do it? Two reasons: they want to sell you the car. If you can see that the monthly financing is in your budget, you’ll be more likely to go for it. The other reason? They don’t want to sell you that car. They want to sell you a much more expensive car, one where monthly payments in a 70‐month plan are affordable.

Why not? As soon as a car is sold, it depreciates rapidly. A car whether new or used  is financially speaking, a bad investment. It is, in fact, a losing investment. The other side to a longer lease is more payments on interest. Eventually, you’ll end up paying twice the original value of the car and will never recover what you owe when you sell it. 

Solution?  Don’t  get  a  new or used car  you  can’t  pay  off  in  three  years.  It might not be as slick as the nicer ones, but your finances will love you.

Leasing.  Keep in mind that cars are financially  a  bad  idea.  They depreciate. Fast. On the other hand, if you pay off a car in three years and drive it for five after that, you can take that money you’ve been using for car payments and put to other use. At the end of three years on a lease, all you have is someone else’s car who wants it back. Now you have to start on a new lease.

Why not? No one needs a new car every three years, and if you are running a car so hard that you do, then the leasing company is  going  to  fine  you  heavily  for  excess  wear  and  tear.  When you’re done, you’ll have no car, no trade‐in and no way to get another car except through another lease.

Solution? No one ever improved their credit by leasing. But a purchase  with  prompt  payments  will  go  a  long  way  to revitalizing your credit and give you a credible option for other uses of your money.

Don’t let these mistakes affect your happiness with purchasing your car. With a little proper care and research, you’ll be able to avoid them, and still, have good financial footing alongside a beautiful and dependable vehicle. 

If you are thinking of taking advantage of the hertz bankruptcy used car deals or need more information from an Auto Advisor about what to check when buying a used car, WyzeDryver provides real time auto advice. Go to www.wyzedryver.com for more information