Check Your Finances

The first step is making sure your finances are in order. What’s your credit score? Get a free credit report to check your score and credit history before seeking financing. Your credit score and clean history can mean the difference between hundreds of dollars in interest over the life of the loan. Sometimes simple changes now can boost your score enough to help you afford a new car much more easily a year down the line when you’re ready to buy. 

Set Your Budget

The next step is to determine how much car you can afford. A good rule of thumb is to budget ten percent of your monthly income toward a car payment and another ten percent for expenses like insurance, maintenance, and fuel. So do the math to see how much you might expect to spend in a year on routine maintenance. Everything from oil changes to wiper blades needs to be included in the budget, not just your monthly payment. 

The biggest thing you need to remember when purchasing a vehicle on a tight budget is just that: your budget. Your budget is king, and sticking to it is the only way to make a car purchase possible. If you’re still not sure what is realistic for you to spend on a car payment, sit down with a financial counselor to help you with your plan. They can see things about your financial life that you might not have thought about. Trust them, and let them help guide you.

Do Your Research

It helps to think of a new vehicle as an appliance, not an investment. It should be reliable and able to get you from point A to point B without hassle. Bells and whistles, while sometimes convenient, aren’t usually necessary.

Research your vehicle needs and determine your wants. Don’t make a spur-of-the-moment decision on a new vehicle purchase. Spend time looking into all the vehicles that fit your criteria. Before you start shopping, figure out what type of vehicle will fit your life best. When buying on a budget, it might take some time to find the right car, and resources like Autotrader, Consumer Reports and NADA can help you make an informed decision.

Stand Your Ground

When you do get to the dealer, know what you’re there for and how much you’re willing to spend. Don’t budge with the salesperson. They are trying to make money, so don’t let them talk you into a vehicle you can’t afford. It’s also a good idea to keep your monthly budget to yourself. You don’t need to tell your salesperson what it is and be firm with what you are looking for and what you would like to spend.

Get Your Financing

Secure financing before you go into the dealership, even if you don’t use it. That way you’ll know what you qualify for and what you can expect for a rate and monthly payment. Some dealerships may be able to beat the rates and terms of financial institutions, but going in knowing numbers gives you the power to walk away from a bad deal if you need to. Credit unions like Rocky Mountain Credit Union pass along profits to members in the form of lower interest rates on personal loans like car loans, so it’s worth checking in with a personal loan officer to see what you qualify for.

Reach out to a RMCU personal loan officer, and get the information you need to plan your next car purchase, no matter your budget.