Picking the right car is important for a few reasons. Just a few thoughts to get you thinking.
Cars are expensive, they are a depreciating asset in most cases. Americans are spending more time in their cars these days, according to an article put out by AAA insurance company (J. Johnson, 2019) Americans are driving approximately 11,500 miles per year. With the cost and the amount of time we spend in our cars making a thoughtful decision is a pretty good idea.
I am an advocate for lists, I rarely remember where I leave them however the act of collecting your thought to paper is a strong and powerful tool, the wants, needs, pro’s and cons will save you the disappointment of getting a car that you find you have outgrown or regret purchasing.
In 2019, interests’ rates are the lowest in many years, manufacturers are sub-venting interest rates to incentivize sales, this is a great time to get into a new car. Paying cash is first choice for any savvy shopper, however with the buy down of interest of rates, some are holding to liquid cash and financing in the short term.
What are some things to consider in the stages of planning?
Consider what the car is for? Do you use this vehicle for work or just commuting to work? If you are an antique collector then cargo room may be a consideration, and gas consumption if you travel distances to obtain these antiques. If you are a parent transporting child, then safety and space may be on your list of importance. I encourage you to access and download my free checklist for additional ideas. ( put link here).
The reasons of use for this car should dictate much of your reasoning for your choices in a car, if you commute 110 miles per day for work, getting a Mercedes AMG G65 at 12 miles per gallon according to Cars.com might not be a financially sound idea. I am not discouraging this car however; this beautiful car is one that you may want for more luxurious trips than to the office, unless your company pays or gives stipend then rock on in your Mercedes. Comfort is something to put on your list, getting you from here to there in a vehicle that is causing you to see a chiropractor every other day is not a sound choice.
If you are a 6-foot 6-inch person do you want a Yugo? Just in case you are too young to remember what a Yugo looked like. Now consider a car that will accommodate your size, leg length and arm comfort as well as back and lumbar.
If you are a small petite woman of 5 feet do you want a lifted truck, maybe but maybe not.
Vehicles within your budget.
Once you have decided what you need, decide what you can afford. Do this before you get to a dealer and meet with a sales person. Knowing what you can afford and what you want to spend will save you time and money in the long run. Knowing your budget and what to expect will relieve you of haggle and stress, at least some. Let’s say you have a $20,000- dollar budget, you can not buy a car at the “today only” sale price of $19,999. Because that is not the “out the door” price, you may need to pay tax, license and documentation fees, each state is different. In California a good rule of thumb is to add at least 10-15% to the cost and what if this car is used? You may want to consider protecting your investment with a warranty. If you are financing you may want Gap insurance, all things to consider into a budget.
Will you pay cash or finance/lease?
The way you are buying fits into the whole budget scenario but it’s a bit more complicated if you have a set price. If payment is more the budget you are thinking about then there are more factors to consider such as interest, term, amount financed, down payment, lease or purchase? And oh yeah, your credit.
Factors in financing are varied and many. A dealer will do what they can to get you financed, it is in their interest to do so. They will want you to finance or lease your car and, in most instances, they will have a plethora of banks to work with including credit unions. Leasing is a way to get a smaller payment in some cases.
Having a few of these numbers worked out before you head out to your local dealer can save you money and time. For instance, using the same $20,000 goal in a financing scenario.
The car for you, remember to include taxes and fees.
Car Price
$20,000
Int. Rate
6.00%
Fees
$3,000
Down payment
$2,300
Term
5-year term (60)
Payment monthly
($400.19)
Some people are afraid of leasing, there is no need if you understand what you are doing with a lease. Leasing gives you a few options, if you are driving low miles and want a smaller payment you can enjoy a car for a few years. In most lease scenarios you have the option to purchase the car, drop it off (back to the bank), trade it in on a new car, or sell it.
Other things to think about.
If you plan on keeping this car until the wheels fall off, then get what you want. Think about a realistic time period you will keep this car, what is your track record so far (unless its your first car), if you drove your last car for 10 years, you may do it again, if you get the one you like. Making sure that the car has good resale value might be a thought if you do not like to keep a car past its next technology jump. Cars are changing all the time and new styles and technology and safety features. Financing a car with poor resale value will come back to haunt you when you go to sell/trade it in on another car. Most manufactures will have a website that will give you the statistics on the car, but other third-party websites may tell you the good, and the bad about a car.
All and all there are a lot that goes into your decision and making a good sound thought-out decision is best for you, your wallet and peace of mind. So, when thinking of shopping for a car put a few things down on paper and do not rush into a decision that you will be stuck with for years to come. Rather than thinking the dealer will cut the price of the car to fit your budget, figure what fits into your budget and comfort and need values. Negotiations are great and fun at times however stress free, ease and happiness may be a better choice for you.
With an insider on your side,
PB
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