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Car Buying Considerations

Many dealerships offer manufacturers rebates, low-interest loans, price cuts and other incentives to get customers in the door. For many consumers, this makes it the perfect time to buy. But, there are many considerations to be made before you rush out and purchase the perfect car. Sure, getting a great deal is important, but it isn't a deal if you end up losing money because you made the wrong decision. Figuring out what kind of car you need, the associated costs of maintaining the vehicle and financing options will help speed along the car buying process.

 Car Buying

You might look great in that trendy little sports car, but it might get a little tight when you take your whole family on a road trip. Examine your lifestyle and needs, then make a list of the “must have” and “would like to have” features you would want on your new car. Some things to think about are: gas mileage, storage space, all-wheel drive or front wheel drive, interior space, engine size and if it will fit in your garage, drive way or parking space.

 

Loss of Value – Many vehicles can lose up to 35% of their resale value within the first year. Used cars continue to gradually lose value as time passes and mileage is added. But some cars lose value more quickly than others. If you intend on reselling the vehicle after a few years, make sure it is one that keeps its value relatively well. You don’t want to be “upside down” – owing more money on your auto loan than what the car is worth.

Taxes and Insurance – Even if you found the perfect car at the perfect price, you still might not be able to afford the taxes and insurance associated with that vehicle. Be sure to call around to a few insurance companies and get quotes on the premiums you will be paying.  Also, contact your state’s motor vehicle department to find out an estimate taxes you will be required to pay.       

Cost for Repairs – Often times buying a used car can be a better deal than buying a new car. However, a used car may develop maintenance issues in a shorter period of time. It is important to check a vehicle history reporting service, such as CarFax, to find out the history of that car before you buy it. Another consideration, for both new and used vehicles, is the cost of servicing the car and replacement parts. 

Leasing – Many consumers choose to lease their vehicles for various reasons -they like to drive a new car every two to three years or use it for business and take it as a tax write-off. However, there are some considerations to keep in mind before choosing this option. There are limits to how many miles you can drive the car during the year. If you exceed that limit you’ll often pay a large per-mile penalty when you turn the car in. There are also penalties if you turn the car in early or if there are damages outside of normal wear and tear.

Trade ins – Before you consider trading in your car at the dealership, know what it is worth. To get a general idea you can go to Edmunds.com or AutoTrader.com to establish a reasonable price. But it is always a good idea to negotiate a deal on the new car first and treat the trade in as a separate transaction. If they are not offering you an acceptable price, you can always go to another dealer or sell the car yourself.

Financing – It is a good idea to have your financing in place before you step onto a car lot. That way you know how much car you can afford to buy and what your monthly payment is going to be. Dealerships often times are focused on getting you the monthly payment you want and it is easy to lose track of the actual cost of the vehicle. You always want to negotiate the price of the car, never the car payment and having your financing upfront will allow you to keep that focus.

The car buying process can be a challenging one. But, with a little prep work beforehand, you will find the perfect vehicle that fits your budget and your needs. 

 


Leasing vs Buying a Car


In this video you will learn the advantages and disadvantages of leasing vs. buying and other considerations before making one of your biggest purchases.

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