Money, cash in Hand (Stock Photo)
GREENSBORO, NC -- There's more to buying a car than picking out what you like. It's also what you can afford and how to pay for it.
Craig Moser of Maestro Wealth Advisors is clearing up the money part of the car buying confusion.
0% Financing vs. Cash Back
You definitely need to do your homework before making this decision. If you take 0% financing, you'll usually have to waive any rebates from the manufacturer, which could be anywhere from $500 - $5,000. Another thing to consider, if you qualify for 0% financing, you may pay more for the car, since dealers are less likely to haggle on the price of the car when they know they won't be making any money on the loan. So, I recommend waiting to talk about financing until after you've negotiated a price.
Use a loan calculator to help you figure out the best payment for you.
Leasing vs. Buying
Traditionally, the wisest financial decision was to buy a car - if you lease, you'll have nothing to show for your money when your lease term is up and you won't be able to look forward to never having a car payment. That's why many of my clients in or near retirement are suspicious of leasing. But it may be a good option to consider, especially for seniors on fixed incomes who want to drive a new car with the latest safety features. Another reason to consider leasing is if you're strapped for cash. If money is tight, leasing may make sense because you will usually put less money down than if you buy.
The Car Payment Math
The average price of a car or truck is above $31,000. Say you get a loan for that amount, and you get a 3% interest rate. If you pay it off over three years- your monthly payment will be about $900. If you take those same terms, but pay it off over 5 years, you'll pay much less per month - down to $557. But, it will add about $1,000 to the total loan. So, definitely think about the monthly payment as well as the big picture