Car Buying Tips by Preferred Financial Services
Car Buying Tips by Preferred Financial Services
Questions to consider while reading:
- Have you ever paid cash for a vehicle?
- How much of your income each month are you spending on transportation?(It should be less than 15%)
Andover, Massachusetts June 24th 2010— For many Americans their cars are the second largest debt obligation they have behind their home mortgages. Because so much money is being invested in a car, it is important that Americans know what to look for when car shopping. Car shopping has become ever more complicated over the years as the selection has grown and the finance options have exploded. The days of people purchasing cars with cash are long gone. Today, only 10% of Americans buy their cars with cash even though this is what is recommended by every financial expert.
So what should you be focusing on if you can’t buy your next car with cash? There are a few basic areas where future car buyers can make a decision that could save them thousands of dollars over the life of the car. The rise in financed cars has coincided with the rise in the length of car loans. Just a decade ago the majority of car loans were 48 months or less. Today, 90% of car loans are longer than 48 months, meaning people are in debt longer, pay more in interest, and own a car that is upside down for a longer amount of time. So, when looking for a car, don’t look at the monthly payments to figure out if it’s in your budget. Even an expensive car can be made affordable if the loan is stretched out over 7+ years. Make sure your loan is less than 4 years in length and adjust your car selection so the payments can still fit in your monthly budget.
Another basic tip is to have a sizeable down payment in hand when going to purchase a vehicle. The more you have as a down payment the lower your interest rate will be meaning a lower total payout and most likely much lower monthly payments. Financing 100% of the car’s value is really a terrible idea as your car loses 10% of its value as soon as you drive it off the lot. This means that from the first day you own your car it is worth less than what you owe on it.
Keep in mind that most car buyers set themselves up for failure by purchasing a car that is out of their price range. Remember, the original purchase price is only half of the total cost of a car. On average, every American household spends about $8,000 on vehicle related expenses per year which includes gas, insurance, registration, tolls, and maintenance. But unlike mortgage payments you can do something to lower this cost and help your budget. Always drive your car until it is paid off. Once it is, take those monthly payments and start saving them towards your next car purchase. Make sure you shop around for insurance as this alone can save you hundreds of dollars each year. My final tip for you all is to evaluate if you even need a new car. If you are in a financial quagmire, evaluate your needs. Maybe you can trade down and save money that way or maybe you could sell one of the two cars in your family. I know everyone has different needs, but it never hurts to take a step back and evaluate your options.
Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .
Contact:
Stephan Tavernini
