3 Factors that Make a Car Purchase Costly

You’re probably paying much more for your car than you should. It may come as a surprise but you could possibly lower your car purchase by several thousands of dollars if you first do your homework and look at the available options (for cars and car loans) in the market.

If you consider yourself a good bargain hunter because you have the uncanny talent to find the best deals when shopping for clothes, shoes, or gadgets, why not apply your skills in making sure you obtain the best deal for your car purchase?

Here are three of the factors that most influence the cost you shoulder, when buying a vehicle, new or used:

Expensive car loan

Believe it or not, many car buyers end up paying more for their car because they don’t have the patience to shop around for car loans with reasonable rates. If you spend time and effort looking around for the best cars to buy, why can’t you spare some time doing a comparison shopping for best-interest auto loans from various lenders?

“Many car buyers end up paying more for their car purchases because they don’t have the patience to shop around for car loans.”

Of course, your current credit score will have a strong bearing on the interest rate applied to you by loan providers. But you should also take note that it still pays to look around to find car loans with the lowest rates applied for your credit standing. Do not under any circumstance, skip comparison shopping for car loans, even if you have an outstanding credit score because who knows, you could still find a loan that could save you much more through lower rates.

Taking a longer-term car loan

At a quick glance, car loans with long duration are far easier on the wallet. You could easily be enticed because the possible monthly amortization you will be taking is an amount that will not significantly impact your personal finances.

However, if you will take a closer and more analytic look, you will realize that an auto loan with a shorter term could make you pay much less compared to one with a longer duration. Use a calculator to compare how much you would end up paying overall for a car loan in different duration. You could be surprised at how much money you could possibly save with a shorter term loan.

“An auto loan with a shorter term could make you pay much less compared to one with a longer duration.”

Costly auto insurance

Another often overlooked factor when aiming to buy a car at a reasonable price is the cost of insurance. Most of the time, an auto insurer prioritizes driver records over credit history when assigning premiums. However, credit-based insurance scores are also widely used as a reference for predicting the likelihood that a car buyer would file a claim.

“Another often overlooked factor when aiming to buy a car at a reasonable price is the cost of insurance.”

In terms of car insurance costs, you are lucky if you are a resident of North Carolina, where the cheapest insurance for motorists is available. On average, a driver with a clean driving record but with a low credit score pays $20 monthly for auto insurance. In Iowa, the cost is about $37 per month.

On the other end of the spectrum, you’d be sorry to live in Michigan, where a driver with a low credit score pays a monthly premium that is $464 higher compared to how much a driver with high credit score pays, on average. In Kentucky, the second most expensive state in terms of car insurance costs, the average expense for car insurance is $185 monthly.