There will come a time in your life when you decide to splurge on a fresh new ride, new or old. This might be after graduation or when you choose to start a family. But either way, it’s crucial that you consider the long-term commitment of a vehicle on your finances.  When shopping for a new vehicle, there is the vehicle financing aspect that you need to take into account. You want to be a responsible borrower when looking for car financing, thus, taking your time to decide which offer to take is key. If you are purchasing your brand-new vehicle at a dealership, a car loan from the dealership might seem appealing. But like many loans, they all have pitfalls. Keep your head above water and don’t fall for any impulse tricks. 

What to consider? 

If you are a first-time buyer, consider buying a used car. A used car can offer you the exact same benefits as a new car, for less. It will feel “brand new” to you while saving you money. It will provide you with the same satisfaction as a new car with lower depreciation value.  If you need some guidance on which steps to take, simply follow our guide to buying a used car and how to get a loan that won’t affect your financial future. 


The most important element when planning on buying a car is the financial implications that come with it. Being approved for car finance is exciting, but be sure that you pick a car that falls within your range. Without a budget, it is easy to fall into the pitfall of overspending.  Before you visit the dealership, sit down and review your finances. Look at how much money is coming in versus how much you spend on a monthly basis. This will give you an indication of how much you can afford to spend on the loan repayments of your “new” car. 

Have a deposit

Now, if you are smart about purchasing a car, your first step would be to make sure that you have a deposit on hand. The budget for your car will likely be determined by your savings.  Putting down a deposit when buying a car will significantly reduce the monthly repayments on your loan. Do your research and try and save up at least 10% of the total cost. This will give you a headstart. If you can afford to pay more than 10%, by all means, do so, it will go a long way when calculating the repayment amount. It will also eliminate financial stress. 

Plan your repayments 

It is paramount that you know beforehand how much is expected of you. Figure out your monthly repayment fee, and the payment period you are expected to pay it over. Your repayments should not compromise your living expenses and your quality of life. If the repayment is too high at the moment, it’s likely a poor decision. Consider your future responsibilities and whether or not you can afford to spend that amount on a vehicle. 

Borrow as little as possible 

Always remember that the money you are borrowing will affect your credit score. Therefore, be cautious not to borrow an amount that exceeds what you need. You do not want to find yourself in a situation where you are struggling to repay your loan because you borrowed more than you need. One missed payment will result in a negative credit score

Negotiate a shorter repayment term 

When you negotiate with a sales representative at a dealership, always go for a shorter repayment term (a shorter repayment term will have lower interest rates and a higher repayment amount.) A sales representative will be quick to mention the benefits of a longer repayment term, as the monthly amount will be significantly lower. But as a result, your payments will have a much higher interest rate, which is far worse on your pocket.  Yes, you want to settle on an amount that you will be comfortable paying monthly but be mindful of how to choose to pay your loan. It might be tempting to stretch your loan repayment over five years, but that can result in higher interest fees and financial stress. 

Final thoughts 

To buy a car, you should start planning months in advance. It shouldn’t be a hasty decision. A car is a big purchase and is not the same as getting a pair of shoes. Make sure that you have taken enough time to decide on a loan agreement that won’t hurt you in the future.  Another thing you need to learn when buying a car is negotiating skills. What your sales representative will interest you with might sound too good to be true, but don’t feel pressured to accept an offer that is handed to you. Have a budget and stick to it.