How to Plan For Your Next Car Loan and Save Money

Creating a plan

Buying a car is a huge financial purchase; one of the largest you will make. This is why it is important to do some planning and perform some research that will help you understand the financial realities, as well as how you will be better prepared to afford this vehicle. Additionally, you may also find some effective methods of saving money off the cost of the vehicle overall.

Knowing what you can afford

This first part of the process requires that you examine your own finances and access how much you can afford. What types of vehicles are within your price range and what ones are not? Not only does this help you narrow down your choices, it also helps to prevent you from getting into a situation where you may spend beyond your means. At this point in time it is a good idea to design a budget. While it is likely that you already have a budget, this may not already include the cost of a vehicle. So in this case, essentially what you are doing is re-evaluating your budget and identifying how much room there is for an upcoming car purchase.

Here is a checklist that you can use as a guideline when planning for your vehicle purchase:

Costs of owning a car

1. Initial purchase price/down payment
2. Registration and title costs
3. Sales tax and GST/HST
4. Financing costs
5. Depreciation
6. Insurance
7. Scheduled maintenance
8. Parking (renting garage space)

Costs of operating a car

1. Gasoline
2. Maintenance and repairs
3. Tires
4. Parking and tolls
5. Tickets

Start to save

Once you have determined how much you can afford to put towards your car each month, you may find you need to save a little bit extra for a down payment. Keep in mind that a down payment is typically at least 10% of the total vehicle cost, however if you are able to make a higher down payment, your monthly payments and total loan size will be smaller. Ultimately, you don’t want to make a down payment that is too high, as this could mean you are depleting your savings more than you should. This is again why, saving enough for the down payment and planning ahead will be important.

Research different car dealers

This part of the planning stage can also involve looking at different car dealers, also keeping your eyes open for promotions and sales that may enable you to save some money on a car. Without spending some extra time locating a variety of dealers, you may find that you end up paying more than you need to. The same goes for financing. Looking into your financing options is a good method of finding better rates and loan features that will help you buy your car, in addition to having a better chance of saving on the total purchase.

Contacting Canada Drives can also help get you where you need to be in terms of car financing. We can help connect with you a with a lender who can help you find a loan that can meet your needs – even if you are in a difficult credit situation. Overall, if you take the time to plan – and in this case just 2 hours of planning, this can help you make better financial choices, even saving money in the process.

How to modify the plan

Not all plans are effective on the first-go. This is where the planning stage helps you determine if the original plan that you’ve designed needs to be modified.

If you make your plan but realize it may not work, it's okay; not all plans are effective on the first-go. This is where the planning stage helps you determine if the original plan of action you’ve designed needs to be modified. Do not let this discourage you however, from pursuing a car loan. You can still rely on the services and advice offered through Canada Drives to help you get to where you need to be. Knowing that someone has your back when it comes to finding car financing can help to alleviate some of your concern.

By keeping Canada Drives in mind as a viable option for connecting you with a car loan lender, you can then focus your attention on revisiting your original plan. With that being said, there can be a number of reasons why you have found you need to deviate from your initial course of action. Sometimes, you find you have not fully accounted for the amount of money that is required to meet the loan requirements, i.e., the down payment, the amount of the monthly payments, the interest rates, and so on.

On the other hand, perhaps you have decided that you want to upgrade to a more expensive car with certain features that will not only prove to be beneficial to the operation of the vehicle and your lifestyle needs, but it will also be a good long-term investment. Regardless, of the exact reason – it is likely that you need to take additional steps to save some more money and come up with methods of doing so.

Revising your budget

Again, going back to your budget and readjusting the figures will be key. A budget is said to be one of the most personal tools you can design and this is because it is uniquely reliant on your specific financial situation. Reinforcing once again, how a budget can be your best friend in these types of circumstances directly relates to its ability to help you achieve your financial goal.

If your current financial goal is to buy a car, then you are in luck – continuing with your pre-planning stages can help you fulfil this next step with more success than if you are unprepared, in terms of your goals and your finances not aligning as they should.

Developing a new strategy for saving

After you have determined how much you now need for your car purchase, you need to develop a plan to get you there. Typically, you will want to spend less and save more, however sometimes that is easier said than done. If after, you have assessed your goals and finances and you’ve found you are in debt – then taking steps to unload this debt can help you out in your efforts of obtaining more credit. With that being said also, the reality of it is that sometimes we require additional credit now – and in the case of car, there can definitely be some urgency.

If you do need the loan before you can unload any of your debts, then focusing on trying to save the additional money will be important. Can you get a second job? Can you cut down on some of the items you are currently buying? This, of course all hinges on your personal finances and what you need. If, after you have reassessed how much you need to save, and you need an extra $2000 for your down payment, then you will need to see where you can earn or cut back on your current expenses to achieve this goal. Timelines are also an important part of this strategy. If you want to have your new car in 6 months, 2 months, 1 month, figure out how you can adjust your finances to make this a reality – and within a realistic timeframe.

By taking a little more time to evaluate your goals and your finances, you can begin to implement your new plan. As a result, if you find you need to extend your timeline as a part of your new plan – by being proactive and more realistic about the situation, you can set yourself up for a higher level of success.

Of course, one of the main messages here is also that life can be unpredictable. Needs can change, just as expenses can change too. Planning is a good way to help you deal with unexpected changes as you can find ways to re-adjust your plan and move forward, as needed.

As prepared as you are by that point, you can contact Canada Drives so we can help you to secure the loan you require to purchase your new set of wheels. As you enter into this relationship already knowing what you want and what you can afford – you will already know what is right for you and your future goals.