Before purchasing a car it is a good idea to do some research.
The extent of the research required will depend on whether
the car purchased is a used car or a new car.
There are advantages as well as disadvantages when buying
a second hand car. It will obviously cost less to buy, but
the car could potentially have mechanical problems which
may later incur additional costs.
Buying privately means there is no warranty, no security
of title and no legal standing if the car purchased proves
to be a mechanical disaster. Buying a car from a dealer
will generally reduce the above risks. Warranty on used
cars is only available if bought from a car dealer. Different
warranty laws apply in different states, essentially you
are covered for the car and all fittings present at the
time of sale.
As well as choosing the right car for your purposes you
should consider the other costs such as: registration, insurance,
stamp duty and the transfer fee. Additional ongoing costs
include fuel and maintenance.
Set the maximum limit on your budget and be strict with
it. Enquire about car
loans available, look at their interest
rates and repayment terms. If you have any savings use that
money for an upfront payment as this will reduce your loan
repayments.
Many car yards offer car loans as well, however, you should
shop around for the best financial deal. The easiest way
to search for a loan is to use the Internet. It is not advisable
to apply for a loan until you get confirmation from a broker
that the actual loan application will be approved if you
proceed with it.
Each time a loan application is declined it will appear
on your credit file report, and it will negatively impact
your next loan application. Having small, paid defaults
on your credit file should not prevent you from obtaining
a car loan, however, the financial institution may slightly
increase the interest rate for the loan. If your defaults
are unpaid your chances for loan approval will be greatly
reduced and the major banks will certainly refuse your loan
application.
Don't forget that you can always negotiate the purchase
price of the car, even if you manage to reduce the purchase
price by 5 or 10 percent this will reduce your loan repayments
accordingly.
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