[LISTEN] Planning on buying a new car? Here are some financing tips

Jane Dutton interviews Certified Financial Planner, Paul Roelofse on your options when considering car finance.

Listen to their conversation in the audio clip below.

If you are in the market to buy a car, the first thing you need to do is to realistically look at what you can afford.

Roelofse advises that you choose a car that is really affordable, reliable and that's going to serve its purpose for your life.

"It's probably one of the real faults of financial planning with most households where we're compelled and we get enticed into buying cars that are just so much beyond our means."

- Paul Roelofse, Certified Financial Planner

Most people do not have the money to pay the full purchase price of a car and have to go the monthly installment route.

It usually takes about three to seven years to pay off vehicle debt and only upon final payment will you have ownership of the vehicle.

"The ideal thing is to try and get this car paid for as quickly as you possibly can."

- Paul Roelofse, Certified Financial Planner

Roelofsa says the mistake that most people make is they buy at the top end of what they can comfortably afford and then they get the shock of interest rate hikes and suddenly it's a strain and that car is not as pleasurable as they might have thought.

When making your decision on how much you can afford to spend on a vehicle, you should remember to factor into that figure the possible interest rate hikes, as well as maintenance and fuel costs.

"Make sure you do your homework."

- Paul Roelofse, Certified Financial Planner

So, what are the key takeaways when it comes to buying a vehicle?

• Be realistic about how much you can afford
• Buy something affordable and reliable that suits your needs
• Factor in possible interest rate hikes, maintenance and fuel costs
• Avoid balloon payments
• Don't buy a vehicle to impress others

For more financial tips, visit Roelofse's website here.

Scroll up to listen to the full interview.