Buying Your First Car, Here Are Some Tips

A woman walks among Toyota Motor's cars with the company's showroom in Tokyo. Photo by Toru Hanai, Reuters

MANILA, Philippines - So you've finally decided that you will be ready to customize the car. If you're like the majority of consumers, you'll probably take some sort of financing to purchase it. Chances are, you've seen the financing deals to be had by banks and dealers and have absolutely started crunching some numbers. Given the massive amount plans advertised by car dealers and banks alike, you can actually be overwhelmed by the alternatives out there.

In investing in a car, as with every large purchases, you will need to do your homework. A car purchase is virtually always an essential expense, if you take it on the financing plan, you'd be making payments for an additional 12 to 48 months. In other words, car finance is a long-term commitment you have to prepare for and take into consideration.

Here are a couple of points to keep in mind to make sure that you receive your dream car at financing terms which can be most appropriate for you:

1. Make sure you are able to afford it.

Before entering the market and deciding on the purchase, carry out some pencil pushing. Can you spend on the car completely, If not, the amount of can you afford for your downpayment and then for monthly premiums, Some car financing deals trumpet huge savings in interest costs. Often, these savings are realized after you pay a big downpayment and amortize the credit over a shorter period To illustrate, placing 50% downpayment and paying off the financing in 1 year would help you save more in interest costs as compared to paying 10% on your downpayment and stretching payment terms to 4 years.

Determine when your monthly income along with your cash flow will allow you to select this type of financing option. Otherwise, look in the other payment options offered. Remember that financing decisions will always be an individual matter dependant on one's income, payment capacity, along with other life circumstances. What works for just one person most likely are not the best with the other.

2. Look at interest expenses.

After determining your payment per month capacity, select which of the financing deals are going to be applicable for your requirements. Generally, a more substantial downpayment and also a shorter payment period means greater savings. Try to get the maximum interest savings guided with this knowledge. Be willing to haggle - you can be surprised how some banks along with dealers with in-house financing deals may be flexible using rates and terms.

3. Consider maintenance and related costs.

Do bear in mind maintenance costs in projecting your car or truck-related expenses. This would include tune-ups, oil changes, regular car checks, on top of your fuel expenses. Also take into consider yearly payments for insurance and car registration.

4. Take time to research prices.

Car dealers and banks both offer car financing packages. Check out what car dealers have to offer with the same car. You might be surprised to recognise that Dealer A's package incorporates freebies which are not provided by Dealer B. Check out the interest rates offered by banks along with they can sometimes offer more competitive rates than car dealers.

5. Freebies count.

Ask your vehicle dealer free of charge LTO registration, rust proofing, or perhaps maintenance checks. You can realize lots of savings on the market freebies, which is probably not given outright, however are actually available. However, do not allow freebies become your sole guide. Look at these only when you have made the comparison of rates distributed by the different financing institutions.

6. Check out your employee benefits.

You may likely be entitled to a motor vehicle plan or car finance with generous terms through your company, or perhaps an interest rate subsidy. Often, the terms is going to be much softer as opposed to runners available in the market industry. Check out if you're qualified for fleet financing likewise.

7. Don't forget insurance.

Don't avoid the cost of comprehensive insurance packages, because you don't know after you will need it. Accidents happen, therefore do acts of God (flash floods) that could ruin your vehicle. Typically, if you're getting your automobile through a financing firm, you will probably be required to get a comprehensive insurance policy for as long as the money has not been paid. After you have completed your amortization plan, comprehensive insurance becomes optional.

8. Leasing.

If you're replace a vehicle, do study leasing options. Although leasing just isn't very popular inside the Philippines, it's got its cost advantages of small businesses.

9. Remember fuel economy.

Your collection of car will be according to your individual needs, but do consider fuel-efficient models which consume less gas rather than gas guzzlers. Often, these cars have smaller engines, which can be ideal if you can't drive long distances or generally accomplish your affairs inside the city.

10. Look in the second hand market.

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Grow Your Money is undoubtedly an editorial partnership between and Citi Philippines to advertise financial education and gives helpful information to Filipinos regarding how to better manage their personal finances.

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February 01, 2018