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The Consumer Law Group, P.C.

How to Avoid Borrowing More Than You Can Afford to Buy a Car

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Smaller Auto Loans Can Help Save MoneyNews flash: car salespeople don’t really care about what you can afford when they are trying to sell you a new car. They are not going to help you get the most for your money or tell you when something is out of your price range. It is important that you understand your financial situation before you go shopping, however, so you don’t end up borrowing more than you should just to get the car you want. We share these money-saving tips so that you don’t end up with a car you love, but a loan you cannot pay off.

How to Save Money and Take Out a Smaller Auto Loan

Car buyers are often tempted to buy more car than they should, thinking that the monthly payment plan will make it affordable. If you are not realistic about what you can actually afford, however, you risk losing the car and the money you have already put into it. The next time you are looking to buy a car, follow these tips:

  • Consider a used car. Many dealers offer barely used, certified pre-owned cars at significant savings over a brand new car. Shop around to find the best deal. With a low-mileage used car, you will not lose much on the life of the car, but you could save a lot of money.

  • Do not trade in your old car. You can make more money off your old car by selling it yourself than by negotiating a trade-in. A dealer cannot pay what a trade-in is really worth or he won’t be able to turn a profit. Find out what your old car is worth, clean it up, and then list it in an auto sales publication or website.

  • Stick with a mid-level model. If you are determined to buy new, don’t fall for the bells and whistles offered on high-end models. You can often get the same car for a lot less by forgoing fancy options.

  • Buy from the lot. You may be able to save money by choosing a car that the dealer already has in stock. Salespeople are often more willing to negotiate with you if it gets a car off their lot than if you are placing a special order.

  • Look for outside financing. Sometimes dealerships offer good financing arrangements, but you can often get a better deal by going to your own bank or credit union. Secure financing before you shop and that will give you a better idea of your ideal price range.

  • Do not buy the extended warranty or service contract.  They often have exclusions that will not pay for repair cost for problems the warranty company claims existed at the time of the sale.

Remember—the dealer is not your friend. It is his goal to move cars and make money. Do not allow him to lock you into more than you can afford. When you are honest with yourself about what you can afford, you will end up with loan payments you can afford. If you believe you have encountered auto fraud, call The Consumer Law Group in Richmond, VA today at 804.282.7900

 

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