Everybody wants to get a great car deal. But we also have to know when we’re about to get into trouble. That’s not always so easy, so we’ve listed here 10 signs you’re too close to the red line (red meaning stop) on a car deal.
The Deal Is More Than You Budgeted – It’s easy to go overboard and spend more than you’ve allocated in the budget for buying a new or used car. Don’t be tempted to get over your head. This is an all-too-common but completely preventable mistake. Know your budget and stick to it.
You Could Do It, But It Would Stretch You Too Thin – Maybe the deal is a little bit beyond your reach. You rationalize that you could do it, if you cut back seriously on several items. The trap here is that you know it’s beyond your reasonable reach and you’ll also be stretching yourself too thin. Better look for another deal that’s within reach.
You’ll Be Neglecting Other Necessary Expenses – Figuring out any which way to make the deal shouldn’t be a consideration, especially if that means neglecting other necessary expenses such as food, shelter, gasoline and car insurance. Sometimes what you want isn’t what you need.
It Means Borrowing The Down Payment – Getting that great new car isn’t such a good deal if you need to borrow the down payment in order to get into it. Besides the monthly car payment, you’ll need to pay back what you borrowed for the amount you put down on the new vehicle. That’s got to come from somewhere and you know the law of diminishing returns applies here. If you don’t have the down payment, wait and save until you do.
You Let Your Emotions Rule – It’s hard not to get excited about the brand-new car you’re aching to buy. But if you go solely with your heart and don’t use your head, you’re setting yourself up to be in the red. If the dollars and cents don’t add up, don’t be swayed by emotions.
Your Credit Score Is Too Low – If you go in blind and get hit with the fact that you have a low credit score or, worse yet, you know this ahead of time, you’re already smack up against the red line in the car deal. You may be able to obtain credit to finance the car, but at what cost? You’ll likely pay thousands more in a higher interest rate, adding up to more money in monthly payments. A better strategy is to work on bolstering your credit for six months to a year by paying all your bills on time and lowering the amount you owe.
The Monthly Payment Is Too High – Telling yourself that astronomical monthly payment is something you can live with is like saying you’re a little bit pregnant. There’s no such thing. Before long – and it’s likely to be sooner than later – that monthly car note is going to cause you big problems. Avoid being in the red before you even start and hold off on a car purchase that puts you in this position. A better strategy is to look for a more reasonably priced new car or shop for a good used model.
You’re Swayed By A Pushy Salesman – You come into the dealership with what you want in mind and a fairly good notion of what you’re prepared to pay. Where you could get into trouble is being persuaded by a very aggressive, but nice, salesperson who won’t take no for an answer. If you begin to feel uncomfortable, the best thing to do is to walk. There’s always going to be another deal, and one that won’t get you in hot water.
Insurance Is Too High On This Car – Getting into a new car, no matter how great the deal is, means more of an expense than the initial down payment and even the monthly payments. There’s also car insurance, a necessary evil, which has to be factored in. If you already know – and you should investigate what it costs to insure any car you’re looking at – that this car has high insurance rates (for you and your record) – it’s a clear sign that you’re too close to the red line on this car deal. Sorry, that’s just the way it is.
There’s Still Your Old Car To Sell – There’s a fine line to walk between buying a new car and selling off your old one. Many would-be car buyers fall prey to making the new car deal and then giving away dollars to the dealer for a less-than-fair trade-in value. A better strategy is to keep the two negotiations separate, even selling your old car first and then working on a new car deal later, if at all possible. The worst-case scenario is that you have two car payments, one on your new car and one on your unsold old one.
Bottom line: Navigating the sometimes tricky distance between being too close to the red line and not on a new car deal means paying attention to these 10 tips. It can only help, whatever your ultimate decision.