Buying a car is the third-largest investment most people will ever make, following tertiary education and buying a home, so you want to be sure you’re making the best choice when you step onto the dealer lot.
So, before you whip out your cheque book or test drive the latest models, here are five questions to ask yourself:
1. Do I really need a car?
Owning a car is indeed aspirational. For the first time, you’ll be “pushing your own keys”, but is purchasing a car necessary? If your current commute is favourable and is not costing you much money, maybe sticking to public transport or carpooling is the better option. For instance, if you work and live in the same area, even walking distance, would it be wise to add another weighty item on your budget list for months to come? Speaking of expenses…
2. Can I afford to buy a car?
If you have to take a loan, investment experts suggest making sure that your monthly payments represent less than 10-15% of your overall budget for the month. Is there something more valuable you could do with the money? Will you be living from “han to mout”, if you buy that 2018 Honda Civic? Buying a car is a major investment, and you want to be sure that it doesn’t crash on all your other aspirations, like having running water and food in the fridge.
3. Can I afford to own a car?
Here’s another consideration. Do you make enough to upkeep a vehicle? Other expenses that come with owning a car include paying for fuel, insurance, tax registration, vehicle fitness, repairs, toll fees, regular servicing, washing and detailing and the initial down payment you’ll need to purchase your new “veeks”. Plus, other additional costs you may not see on the surface. However, if you have ticked “yes” to all the questions so far, then you’re almost ready to buy the car of your dreams, but there are a couple more questions to consider.
4. What type of car should I choose?
It’s great that you can afford to buy the vehicle that you need, but have you decided on the make or model that you want as yet? When choosing your car type, make sure it fits your needs and lifestyle. So, maybe if you haul lumber every day, you may not want to buy a mini-coup sports car, or if you have a family of 10, a five-seater sedan might come up short. Also, when choosing a make, or model, be sure to do your research and check its track record. Is that model known for having recalls and transmission issues? Or, is it famous for having expensive repair parts that might cost you nearly double in the long run? A key note here is to do your research and ask around before settling on a type.
5. Should I buy a new or used car?
New cars depreciate in their first two years, sometimes up to 40%, so the older the vehicle, the more value you get for your buck. However, if you’re looking to get 100% financing from a bank or credit union for your purchase, then a newer car may be the better option. Still, later models do come with a wealth of other benefits including, lower mileages, more upgrades and a slimmer chance of needing immediate repairs. But at the end of the day, the wheel is in your hands whether you choose to get a new or used car.
So, are you ready to buy a car? If you have found a definite answer for each of these questions, then you certainly are!
To protect your new ride, you’ll need quality insurance. Get a quote here to see how much coverage for your newest asset could cost.