January is Financial Wellness Month, the perfect time of year because we can start fresh when it comes to putting all of our finances on the table and making a resolution to get them in order and make them more manageable. We resolve to save more, spend less, be more frugal when it comes to spending, and work hard at sticking to a realistic budget. If your resolution this year is to improve your personal finances or you need to make some positive changes with your money, think about making smart automotive decisions which could have an immediate impact on your monthly budget and down the road when you learn how to properly manage your vehicle.
When it comes to making big purchases, a vehicle is often the biggest investment someone will make second to their home. Saving money towards a big purchase can come in handy. When it comes to buying a pricey item, it is important to think ahead and plan accordingly. Your best bet for large purchases is to use cash, not credit cards or loans. Obviously this is not always possible (or at least for the entire purchase), so planning out the future of the purchase is vital. When you don’t buy a large purchase with cash, it is a good idea to have money saved for a good down payment at the very least. Before you sign any paperwork, be sure that you can afford the loan payments. If you don’t have money for a down payment or you’re unsure if you can afford the payments, then you are not ready to make the purchase.
According to financial experts, a hypothetical situation could be as follows. You see a $20,000 vehicle that you are interested in, but you do not have the cash to buy it outright. You decide to take out a loan. The down payment should be about 20-25% of the total to make ends meet. That means you need to save up $4000-5000 for your down payment alone. Then, finance the rest and make sure you can afford the payments. When calculating what your payment will be, you need to take sales tax and interest rates into account as well as the term of the loan.
Smart financial decisions also come after the vehicle is actually purchased. Preventative maintenance and keeping a vehicle until after it is paid off is a great way to save money down the road, but getting there takes time, money and responsibility. With the cost of new cars rising yet again, buying a previously-owned (or used) car is a good decision for many people. New cars lose a large chunk of their value as soon as they’re driven off the lot; and many people find that used vehicles are a smart financial alternative. The good news is that vehicles are made better than ever, so a used vehicle could be not only a good value, but more affordable too.