Having a car has never been more important. Due to the pandemic, a car has become a necessity rather than just a luxury since commuting or taking public transport increases our chances to be exposed to the virus. It is now considered to be a "safer" option if we use our own. Having a car is also helpful during medical emergencies especially when there is no ambulance available in the area.
Unfortunately, buying one may not be easy since it comes with a hefty price tag. In fact, buying a car nowadays is more expensive. According to Forbes, in January 2022, 82.2% of all new-vehicle purchases were above the manufacturer’s suggested retail price. This is because of several factors including the pandemic, shortage of semiconductors (chips), and now the war in Ukraine. With skyrocketing prices, potential buyers will need to do research and adequate planning before making a decision.
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Here are 3 things to consider before buying a car:
1. Determine what type of car you need
Given that there are so many different models and car types available, it is important to find a car suitable for your needs. Ask yourself these questions
- What is the main purpose or how do you intend to use the car? Is it for city driving only?
- Who will be using the car? How many passengers?
- What cargo capacity do you need?
- Are you looking for manual or automatic transmission?
- If you are considering larger vehicles, do you have enough available parking space at home?
Also, check your priority when it comes to cars - Is it engine power or fuel efficiency?
Due to increasing fuel prices, we have to consider the fuel consumption of our chosen vehicle. More horsepower generally means higher fuel consumption. Choose a vehicle with no more horsepower than you actually need in that way you can save on fuel and reduce environmental impacts.
2. Decide Whether to Buy a New or Used Car
Getting a brand new or a used car has both advantages and disadvantages. Brand new cars are more reliable, have increased durability, and have better fuel efficiency. Used cars, on the other hand, are more affordable and cheaper given that the bulk of depreciation already occurred.
Please note though that buying a used car doesn't necessarily result in savings. Used cars may likely cost less to purchase but one may still end up paying more in the long run due to maintenance costs. Thus, in case you decide to get a used one, the ideal age for a used vehicle is 3-4 years old maximum.
3. Set a Budget and Check Financing Options
Budget is a top consideration when buying a car. Decide how much are you willing to spend not just on the purchase but also on the operating and maintenance costs of the car.
According to the 20/4/10 rule, it is recommended that car buyers should at least make a 20% down payment on a car with a four-year car loan and then spend no more than 10% of their monthly income on transportation expenses. Monthly transportation expenses include your auto loan payments, maintenance, gas, and car insurance.
You can check how much will you spend on gas, here.
If you are planning to apply for financing, it is important to determine how much monthly payment can you afford.
Make use of online tools like CarPaymentCalculator.net to help you determine your monthly auto loan payments while considering your downpayment, rebates, interest rates, and sales taxes. It's easy to use and produces instant results. You can even create and print a loan amortization schedule which many find really helpful.
Conclusion
Whether you are a new car owner or not, it is important to consider all of these things in that way, you can avoid costly mistakes of getting the wrong car or a financing plan that doesn't work for you.
Once you have done research and planning, you will have the confidence that you made the right decision. You can simply sit, back, and relax. or better yet, play the Cars Lightning Speed (a racing game based on the Disney animated movie series)
