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Buying Guide: How to Know You’re Financially Ready to Buy Your First Car

Buying your first car is a big deal, and it’s definitely an exciting point in your life. But you’ve probably heard about all of the financial responsibilities associated with vehicle ownership. Or maybe you’re completely head over heels with the idea of having your first car and you’re indifferent to financial burden. If you are looking to Buy Your First Car take a look at this short guide that will allow you to know if you are ready for this step.

Whatever the situation, you need to know when you’re financially capable of making that first purchase.

Buy Your First Car

Are You Financially Ready to Buy Your First Car

You aren’t living paycheque to paycheque 

If you’re having trouble making your bills every couple of weeks, it doesn’t make sense to take out a loan for a car. When you’re living paycheque to paycheque meeting normal expenses can be difficult. This doesn’t mean you’ll never be able to get a car though, sometimes you just need to take a look at your monthly expenses and see where you can cut back. If you’re living comfortably and you don’t need to worry about when your next payday is, you’re more likely to be able to afford financing a car. There are tons of other costs that come with a vehicle, such as insurance, gas, oil changes, and miscellaneous repairs. 

You’ve done your homework 

One key element to being financially prepared to take on the responsibility of a car is how much you’ve budgeted. If you’ve compared your initial down payment, interest rates, and how much it would cost you every month, and you can afford a vehicle you’re probably ready. If you have finances set aside, and you haven’t done this yet, start so you can see if it’s financially feasible for you to get the vehicle you want. 

You need to decide if you’re going to buy a used or new vehicle depending on your financial situation. It’s beneficial to have this dealership to find out what models might be more cost-efficient.

Buying used cars in Halifax are generally recommended for first-time buyers, your insurance rates may be substantially higher if you have a newer vehicle. You’ll also want to look into the resale value of cars, and what cars retain their value for the longest duration. This is important to getting your second car in instances where you’re looking to sell or trade in. 

Your debt is under control 

When you have an excessive amount of debt, whether that be student loans or credit cards, it can feel like a weight is above your head. If you’re unable to meet your financial obligations on these loans, that definitely is an indication you shouldn’t invest in a vehicle just yet. If you’re in this situation, focus on whatever amount of debt is the lowest, and be aggressive about paying it off. Making the minimum payment on credit cards or loans can take years to successfully pay off. If eating out less means you’ll have a vehicle later on, you’re going to thank yourself considerably. 

You have financial goals 

When you’re responsible with your money you probably have financial goals outlined. Perhaps one of your goals is to have an emergency fund, or have x amount of dollars saved for a downpayment on a vehicle. If you’re developing financial goals and you’re meeting those targets you’re developing the kind of responsibility required for car ownership. If you don’t have any emergency savings, or a downpayment put aside for your car, it might be best to wait until you have those nest eggs set aside. 

You have decent credit 

Having good credit doesn’t just mean you’ll be able to successfully finance a car, it also means that you’ll have a lower interest rate than otherwise. Alternatively, if you don’t have the best credit because you just started building your credit, you can try to get a co-signer to help you. If you have bad credit because you haven’t been keeping up with your bills, you might have a hard time convincing a cosigner to help you out. Also, if you don’t have the best credit, it might not be time for you to take on the additional financial responsibility of paying for a car. Work towards enhancing your financial situation, and you’ll feel more comfortable using money on your vehicle. 

If it feels like adding monthly car and insurance payments is a headache, you might need to consider lowering your expectations for what kind of car you want to buy. Alternatively, you can always put money aside and revisit the issue later on. Remember, even if a new car is going to raise your insurance costs, they’ll lower over time with years of safe driving. Reflect on your current financial situation, and decide if you’re ready to hop in the driver’s seat. 

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