3 Things to Consider Before Buying Your First Car
Once you finally reached your financial independence, purchasing a car may become one of themost significant items on your bucket list. While the prospect of buying your first car is thrilling, it’s a major financial milestone that entails some careful planning and long-term commitment. It is also important to shop around first before purchasing a car, and make sure to compare vehicle loans using a car loan calculator to help find the best loan deals in town.
Here are a couple of questions to ask yourself first when planning to buy for your first ever car:
- New or used car
There are advantages and disadvantages to each. If you just graduated from college and have just started your career, you are probably still building out your finances. Usually, used cars are way cheaper than new cars, and not simply because old model years have gone out of style. It is projected that a new car depreciates by about 20% in its first year. A used car, but, has already depreciated by the time you purchase it, so you can take advantage of a lower cost.
Make certain that you also take in consideration the maintenance and repairs when deciding whether you’re going to buy new used vehicle. Many auto dealers will offer some repairs and maintenance coverage if the car is under warranty, regardless of whether a car is new or used. But if you’re purchasing a car from a private owner instead of an auto dealership, you may not be clear on where you stand with the warranty or worst there will be no warranty at all. Since used cars are older, they may need a lot of maintenance, which can charge you a large amount of money. Regardless of whether you buy new or used, you should understand the terms of the warranty so you can make the most of your car buying.
2. Car Insurance
When purchasing a car, you also need to consider car insurance coverage. In some cases, it will cost you more to insure a new vehicle. But covering a used car can be costly if it doesn’t have certain modern safety features e.g. air bags. So make sure to check first with your insurance company before you make your decision to buy a new or used car.
- How should I pay for my car?
If you’re purchasing a car, it’s almost always best to pay cash. You can save a lot on interest and other finance charges associated with vehicle loans when you buy your car and pay it in full right away. But, realistically speaking, you may need to apply for a loan especially if you can’t pay the total price of the car in full and you need a car immediately and won’t have sufficient time to save up. A lot of bank offers low interest rates and easy payment scheme with their car loan, just like Bpi auto loan.
While you may not have enough in your savings account to fund the entire procurement of a vehicle, consider putting down a significant amount of down payment. This will lessen your monthly auto loan payments, which can help you stay within your monthly budget.