Personal Finance Tips for Purchasing a Vehicle

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Vehicles are the average American fixation second only to owning a house. Not only does a vehicle provide you with transportation, it is a status symbol of beauty and individuality. Your vehicle sends a message about your taste and financial stability to all who see it.

Cars and other vehicles take up a great deal of disposable income in North America. Most Americans own at least one vehicle; many own more. This causes a great potential for a financial dilemma, especially for those who have a low disposable income.

If we were all sensible with our finances, we would follow the following tips when purchasing our mode of transportation:

Pay cash for the vehicle. Never borrow money to pay for either a new or used vehicle.

Study your budget. If you can't afford a brand new car, buy a used one that's in good running order.

If your current mode of transportation runs well, keep it. Never buy another vehicle unless it's absolutely necessary.

Of course the majority of North Americans do not or cannot follow this advice. If you really must have that vehicle that is beyond your means, buy a used one that is in good running order. These days all makes of cars look much the same. No one will ever know that you purchased it used unless you tell them.

Whatever vehicle you choose, be sure to shop around for financing and take advantage of the best interest rates. Credit unions usually have the best deals. Avoid finance companies that charge exorbitant interest rates or you will fall into a financial dilemma.

Pay your loan off as fast as possible to save on interest charges. If you only pay the required monthly payment, the interest will cost you thousands of dollars by the time the loan is paid off. In some cases it can cost you 50 percent more for the vehicle by the time the loan has matured.

If possible, borrow the money to buy a vehicle from a family member or friend who can give you a much better interest rate. This will allow you to save money while you drive the vehicle of your choice.