Beep beep, zoom!
That’s the sound of you driving off in your new car stress-free because buying a vehicle doesn’t have to be as daunting as it seems. For many, buying a car can feel overwhelming — especially when it’s so easy to get caught up in the heat of the moment and sold something you didn’t plan to buy. That’s why we have you covered with this beginner’s guide to car buying.
Whether you’re in the market for your first car, it’s time to change up your ride to fit your growing family, or you want to feel more prepared for your next purchase, with some of these helpful tips, you can smooth out the process.
Fresh off the Assembly Line or Pre-Owned
Unless you’ve put enough money aside for a top-of-the-line vehicle where cost isn’t a factor, you’ll want to consider the pros and cons of a new vs. a used car. Although you can count on the newer models to have the most up-to-date technology and fewer upfront repair requirements, a used car will be kinder to your wallet at the initial purchase and allow for a shorter loan.
If you’re comfortable with a larger down payment, you aren’t expecting any life changes that will affect your finances, or prefer less potential unplanned car maintenance, venture for the new car. However, if you don’t mind driving a vehicle with two-plus-year-old parts and want to pay off the car sooner, it’s always a good idea to save yourself some money and vie for a pre-owned car.
Regardless if you choose a new or pre-owned vehicle, be sure you budget for a situation where you can adjust for the unexpected; you don’t want to be stuck owing more than your car’s worth if you have to sell or have your car repossessed due to missed payments.
Calculating Your Budget
To assist with finding a rough estimate for your upcoming vehicle purchase, you should use a budget calculator that includes the cost of gas, auto insurance, loan payments, and maintenance. If you are buying a car outright, you won’t need to consider financing, but for most, it’s helpful to play around with a loan calculator so you have a better idea of how much you’ll be able to spend. The more you know, the more you can prepare for with your budget estimates.
While considering your monthly costs, you should also factor in a down payment of around 20%. A sizable down payment will be a larger initial investment but it will lower the monthly payments for your car. This will help significantly in the long run, especially if you run into an unplanned money crisis at some point while you’re paying off your car.
Car maintenance should also be included in your potential budget and will vary depending on your pre-owned versus new vehicle purchase decision. While you won’t know the exact price of maintenance, the vehicle’s mileage will help give you a general idea. Cars will typically require new wiper blades once a year, new brake pads about every 40,000 miles, an oil change every 5,000 miles, and annual inspection. You can easily add up the cost estimates for your area to include in your overall budget.
Buying vs. Leasing
Buying a car means buying an asset. But did you consider how much you intend on using that asset?
If you drive fewer than 15,000 miles a year, frequent public transportation options, and don’t often go on long car trips, consider leasing. Not only will you have the benefit of being able to ride around in a new car, but you’ll also have smaller monthly payments and you won’t be entirely liable for fixing everything in the car.
In contrast, when you buy, you’ll own the car at the end of your payments and can either pass it on to a family member, sell it, or enjoy not having to make monthly payments for years to come.
With the budget, leasing, and financing options holding a heavier weight in your purchasing decision, choosing a car type may begin to seem arbitrary, but it’s far from that. If you live in a city, where parking availability is sparse and spots are tighter, it’ll quickly become a top tier concern. In addition to ease of parking, car size is an important safety feature.
While all car manufacturers work to ensure their vehicles are as safe as possible, the laws of physics outweigh their best efforts and more often than not, bigger cars are generally safer than small cars. It’s a fact also born out by statistics: minicars have higher death rates than SUVs, station wagons, and minivans.
Smaller cars also have less passenger and cargo room so you may end up needing to sacrifice the luxury of stowaway space for trips or volunteering for carpool. It’s always a good idea to consider your needs and lifestyle when researching the best model to purchase.