Buying a new car, or a new used car, is one of those experiences that bring a mixture of excitement and dread. You’re getting a new car, so hey, that’s great! New cars are fun and awesome, something different to shake things up a little. On the other hand, now you have to wade through financial stuff, trying to get the best deal. After all, this is a big purchase, and whatever you get, you’re stuck with it for years.
Yeah, no pressure …
Before you buy that new or pre-owned car, here are a few things to keep in mind that can make a difference in your car’s cost, both initially and during the long run.
To Finance Or Not To Finance
That is the question. Whether tis nobler to pay all in cash up front, or take up installment payments against a sea of finance charges and other fees.
Alright, enough of Hamlet for now. If you have the luxury of being able to purchase a car outright, then great. Do so, and avoid at least one headache. Otherwise, think carefully about your car loan and its terms.
Right off the bat, you should come up with a down payment, and try for at least ten percent of the purchase price. While many financers will allow you a zero down payment, remember that the interest charges will be based on the amount financed. The best-case scenario is to have an old vehicle to trade in as part of the down payment, and provide the remainder in cash.
As an aside, if you don’t have much of a credit history and you’re trying to establish one, you could do worse than getting a car loan. Financing a car is generally accepted as a smart way to get your start in the wonderful world of credit and debt.
Of course, if you do finance, that means the vehicle is not technically yours yet, and so you need to have it insured to the hilt until it’s actually legally yours at last, so as to protect the lien holder’s investment. And that brings us to the next point.
Insurance!
Insurance is one of those things you spend a lot of money on, and then pray that you never have need of it. The more your car is worth, the more it takes to insure. There’s been more than one person out there who bought a car then suffered from delayed sticker shock when they discovered by how much their monthly insurance premiums went up.
There are other factors that go into insuring your vehicle. You need to take into consideration things like the age of the vehicle, where it’s principally garaged, your driving record, how large a deductible you want, heck even your FICO score. All of these factors contribute to the final cost of your annual premium.
Car Repairs And Other Maintenance
If you buy a brand new car, it comes with a warranty. The warranty as a rule is split into several levels. Usually there’s a 12-month warranty on anything that goes wrong, outside of normal wear and tear. Then there’s normally a power train warranty that goes for another year or so, depending on the company and the deal you can get. Finally, there’s sometimes a further warranty on the emission systems. Again, your actual mileage may vary (see what I did there?).
However, if you’re buying a used car, remember that you’re buying someone else’s former car issues. Maybe the car is a creampuff, maybe not. And while the dealer can clean up the car, replace the fluids, take care of any obvious problems, and slap an air freshener on the rear-view mirror, who knows what else is wrong that has gone undetected?
Some dealers offer an extended warranty option, where you pay something in the neighborhood of several hundred dollars and in return you get decent warranty coverage for a certain period of time. This may be worth looking into.
Incidentally, my favorite mechanic, a man of much experience, told me that the two car brands that he and his buddy “hate” are Toyotas and Hondas, due to their tendency not to require many repairs. Take that for what it’s worth.
Gas Prices
Unless you’re going electric, gas will be a factor. As the article “What Cars are the Cheapest to Own?” points out, the less fuel your car uses, the cheaper it is to own.
Gas is expensive, and the price can change at a whim. For instance, at the time of this writing, a nuclear deal has been worked out with Iran, and it looks like one result will be increased oil available for sale. Analysts are already giddily predicting gas prices to drop below $2 a gallon when it’s all said and done. But if ISIS manages to blow up an oil well or some such, you can bet that prices will skyrocket again.
The simple fact is, the bigger the car, the more gas it eats up. That’s why it’s important to make sure that you purchase only as much car as you need, no more, no less.
These are just some of the factors you should consider when picking out a new car. Just remember that an informed consumer is a smart consumer, and a smart consumer doesn’t overpay.
