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Know what you can afford before you start shopping for a car

So you’re getting a new car – congratulations! It’s one of the most exciting purchases you can make. In fact, for most Canadians, it’s the second biggest purchase of their lives! And whether this is your first car, or your tenth, everyone has different ideas on what you should get. Between the advice from your friends and family, ads in the newspaper, and the research you’re probably doing on your own, choosing what you want to buy can quickly get overwhelming.

The pitfalls of shopping before you’re "ready"
It can be really easy to get caught up in the latest car models, cool new features, and special offers that seem to surround a new car buyer. As you casually conduct some preliminary browsing, you may wind up setting your heart on something that falls outside of your price range. If you don’t want to end up with a car you can’t afford, it’s important that you keep your feet on the ground and do some up-front planning.

The benefits of a pre-approval
Before you even start looking, it’s a good idea to know the price range that you are shopping within. If you’re not sure how much you can afford, one way to find out is to get pre-qualified for your car loan at your bank. Knowing your budget is the best way to keep you from shopping outside of your comfort zone.

Financing options
When you’ve found the car that’s perfect for you, consider all of your financing alternatives, such as:

  • Car loan options from your local bank available at the dealership or through your branch

  • Low interest rate promotions supported by the manufacturer

  • Leasing

Just remember, if you are presented with a low lease payment, make sure you’re aware of all the conditions that come with leasing a vehicle. To find out more, read our Buying vs. Leasing a Car article.

Ready to buy
Once you are ready to buy (and you’ve decided to finance your car purchase), you can arrange for financing through your bank branch, or you can ask for financing from your dealership. What many car buyers don’t realize, is that most dealerships can offer financing from the bank of their choice. So if you’re an RBC Royal Bank client, simply ask for RBC financing at the dealership!

Buying a car is an exciting time. Just remember to make sure that the car you want to buy is within reach. When you can balance what you want with what you can afford, you’ll avoid disappointing yourself or over-extending yourself financially… and you can truly enjoy your car buying experience.

Topics: Loans | Car loans

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