Use these five steps to help you make the right decision about when and how to buy your first car. 1. Know what it costs to keep a car on the roadThe price for buying a new or used car is one thing; what it will cost to keep it running is another. It is a good idea to find out how much it costs to operate a car in Canada. It involves factoring in such things as insurance, fuel, maintenance, and depreciation costs over your period of ownership of the vehicle. Our article,
provides some key points to help you evaluate what you can afford. |
2. Consider whether you want financingNot every student will want to pay cash for a car. Financing allows you to divide the cost into fixed amounts of money you pay back over time. Whether you buy something new or used, you can help finance your purchase with a car loan. After making your down payment (if any), you borrow the rest and repay the loan in monthly payments. |
3. Determine a loan term that works for youThere are many car loan options available offering different repayment terms. If you’re concerned about high monthly car payments on your lean student budget, you can consider a longer term. The TD Canada Trust
6- or 7-Year Car Loan allows you to pay less every month to repay your car loan. And you’ll have more money left over for essentials like car insurance and other car-related expenses.
Use our Loan Calculator to help work out how different monthly car loan payments would fit your budget. |
4. Look at all your payment optionsKeep in mind that, as a student, you do have other options to help supplement financing a car, including through your TD Canada Trust
Student Line of Credit. This could be a good option to help with expenses and keep monthly payments to a minimum. You only need to pay monthly interest on the credit you use, and you can manage your cash flow after you graduate to repay the balance.
Sort out your financing options before you buy: |
5. Choose car insurance that fits your student budgetAs you probably know, having car insurance is a must before you can drive away with your new or used car. Some cars cost more to insure than others. The premium depends on your driving record, the value of the car you want to buy, repair costs, and the car’s insurance loss history. Avoid surprises by getting a quote before you buy. That way, you’ll know how much to add to your monthly student expenses. Ways to save on insurance. As a student, there are some good ways to reduce the cost of your car insurance, including: - Get an alumni rate: If you are a member of an alumni group, you may be eligible for a discount on your car insurance.
- Drop collision coverage. Ask about this as an option if you’re looking at car that’s more than 10 years old.
- Upgrade driving skills. You can get a break on your rate if you take a recognized driver’s training course if you’ve been driving for less than two years.
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