You already know that car loans cost less when you can pay a portion of a vehicle’s purchase price in cash. Makes sense—you borrow less when you have a down payment.
But coming up with that down payment can be a challenge. And then, once you have a car loan, that monthly payment can be a tight fit in your budget.
Here’s a tactic that gets you closer to the down payment you wish you had and can also let you “try on” your car loan payment on a trial basis, no strings attached.
Just save what you expect your car payment will be for several months in your down payment fund. Two things happen:
- First, you build up that down payment to an amount that can make a genuine difference in your eventual car loan.
- Second, you get to audition your car loan, with the luxury of stopping that “payment” if it really is too much for your budget.
There’s no down side. You can stop payments at any time, without penalty, because you’re making the payments to yourself.
This tryout can serve as a reality check for your plans to buy a car. You might have the pleasant experience of realizing that you can handle a car loan without too much pressure—or you might learn that you need to wait a bit longer, save a bit more, or plan to buy a less expensive car. What you learn during this trial period will pay dividends for all the time you own and drive your next vehicle.
An Extra Credit Union loan officer can help you determine how much car you can afford and can even preapprove you for a car loan. Call 586.276.3000 or stop in today to talk about your plans.
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