There's nothing quite like the experience of buying a car. Sometimes we are overcome by emotions that relate to how we perceive that owning a vehicle will affect our life. In the U.S., where there are more vehicles than households, some people's self-image is closely tied to their daily driver. 

One of the most important aspects to remember is that our car purchasing decision is a significant investment that will affect our lives for years to come.  This is especially true with respect to our long-term financial health. If we enter into a contract one a vehicle that we cannot afford, this could have a debilitating effect on our finances. 

You May Have To Buy Your Way In

If you have no credit or bad credit you might find that many car dealers will require a co-signor or large down payment in order to get your vehicle financed. This also means that you will pay more for the cost of borrowing than other buyers. Take for example the following scenario: 

2015 Chevrolet Impala

Price: $17,000

Buyer A (Excellent Credit)                         Buyer B (No Credit or Poor Credit)

Interest Rate: 2.9%                                   Interest Rate: 21.99%

Cost of Borrowing: $1,324                         Cost of Borrowing: $11,166

Total Cost of Purchase: $18,324                Total Cost of Purchase: $28,166

Note that Buyer B ends up paying over $28,000 for a vehicle worth $17,000. 



By Nick Meade     March 4, 2018

Buying A Vehicle: A Decision That Helps to Determine Your Financial Health For Years To Come

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