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Don’t Make 2 Money Mistakes When Buying A Car

Buying a CarThere’s a certain appeal to buying a luxurious car. The plush leather trims, roomy interiors, and the big powerful engine that will get heads turning. While there’s nothing inherently wrong with such a move, it comes at a hefty price, says a car dealer in Auckland. Excited by such cars, some buyers often forget that they come at a great cost.
In addition to the high asking price on the unit, you will spend more money on insurance, repair and maintenance, and fuel. Bearing these factors in mind keeps when visiting a car dealership keeps you from making some costly mistakes.

Putting up a low-down payment

Since they have a high price tag, the down payment of such cars is equally high. That means you will have a hard time raise the recommended deposit of about 20 per cent. On a car going for $30,000, a 20 per cent down payment works out to a hefty $6,000, leaving you to finance $24,000.

While dealers will accept lower down payments, it means that you will borrow more money. A higher loan amount translates into higher monthly payments over the lifetime of the loan. It means you will have paid out more money in interest.

Stretching out payments

If you walk into a dealership while unprepared, a smooth sales rep might rope you into a car that is out of your price range. Naturally, you will object that you can’t afford the car. However, a seasoned salesman will sell you on a payment plan that features low monthly payments.

The only drawback here is that these payments might stretch for many years, usually more than five. Unfortunately, long-term loans are costly, and much of the money goes towards paying off the loan, not building equity in the car. While the monthly payments may be low, the interest rate on such loans is higher.

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Given the high asking prices on cars, most people need to arrange financing to afford them. However, you need to proceed with caution when picking the financing terms as some options can leave a gaping hole in your finances.

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