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
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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