Four Questions to Ask Yourself Before You Hit the Dealership

Four Questions to Ask Yourself Before You Hit the Dealership

Four Questions to Ask Yourself Before You Hit the Dealership

You're ready for a new car-but have you done your homework? You need to ask yourself some key questions before you hit the showroom floor. Knowing your budget, your long-term needs, and your preferences will help you create a good relationship with your salesperson and get the deal that will keep you happy for years to come.

How much can you afford in monthly payments?

The first thing to ask yourself before you even go to the dealership is how much you can afford. Unless you have a ton of cash on hand, you're going to leave with a vehicle and with a monthly payment. You need to set a budget for your vehicle that you know you can comfortably afford and, no matter what, commit to not go above it. If you take the time to properly work out what you can and can't afford, you can concentrate on getting the best deal for what you can afford and not be tempted by options and upgrades that could stretch you to breaking point.

Will this car grow with you?

The chances are that, if you're financing a vehicle, you're going to be living with it for a long time, so make sure you're buying the right one. Don't be tempted by a four-seater coupe if there's you and your partner and three kids to ferry around on a regular basis, and don't go for a 6.2-liter V-8 if you can't afford the gas!

How long before you need a change?

Let's be honest: do you change vehicles as often as you change hairstyles? If so, you need to ask yourself two crucial questions: how long do you intend to keep your new vehicle and how many miles per year are you realistically going to be driving in it? Deciding whether you're going to get bored and want to change after two or three years, or whether you're going to keep it for considerably longer, has a big effect on what type of financing will be best for you. If you intend to keep the vehicle for a long time, a standard auto loan will be fine, but one with a large balloon payment after three or four years won't be fine unless you'll have the lump sum needed to settle it off and keep the vehicle. If you're likely to want a change after three years or so, leasing could be the best way to go.

Do you want to own a vehicle?

Many people have a hang up about "owning" the vehicle they're driving and see leasing and loans with balloon payments at the end as not being a form of genuine vehicle ownership, and they're right. However, there's really no difference between a lease or a loan with a balloon payment than loans that go over 5 or 6 years. In the end, you don't own the vehicle until you've paid the loan off, so considering whether or not alternate financing routes might work best for your circumstances is worth the conversation with the finance manager.