There are many things to consider before purchasing ANY car, but a NEW car might spark particular questions. There are pros and cons to buying new cars, just as there are pros and cons to buying used cars. You should figure out a few things before you buy a new car.
Ask Yourself Why Before You Buy A New Car
First off, when purchasing any vehicle, ask yourself “Why am I buying this car?” Is it for daily use, will you need a lot of storage space, seating space? Make sure the makes and models you narrow your search down to are practical reflections of how you will use the car.
You may love the look of a larger vehicle, but if you don’t have five children, you might not need that much space and that particular car may not be right for your daily commute and errands.
How Does It Fit For You
After you’ve considered the personal aspects of which car to buy, move on to the less subjective parts of the process:
1. Depreciation
Most cars depreciate at about 15% per year. With new cars, there is a 20% depreciation rate as soon as you drive off the lot. You want to consider this before you decide to buy a new car, especially if you can’t put much money down as a down payment. Chances are you’ll be upside down on your car loan almost immediately if you’re financing the entire cost.
2. Cost-to-own
Also, consider the true cost to own the car you’re eyeing. These costs include insurance, fuel, maintenance, and more. Maintenance costs vary by manufacturer and model. Do your research—some manufacturers have better reputations than others. Some new cars even come with “free” maintenance plans for the first couple of years or for a certain number of miles.
3. How much can you afford?
Don’t guide yourself solely by what the dealership is willing to lend you. And, don’t be blindsided by an attractive low monthly payment—oftentimes tied to a super-long loan term. Consider all aspects of financing—the total amount you are going to end up paying for that vehicle when it’s all said and done. Before you buy a new car, that’s what matters.
Options and Resources
Mid Oregon is presenting a free webinar on Tuesday, October 19, called “Get the Best Car Deal”. Register for the 7 p.m. webinar. Learn more about other Mid Oregon financial education webinars.
Are you in the market for a car? In today’s environment, is it more important than ever to make a good purchase decision.
Find out how to save money and remain in control of your car deal. Learn how to determine how much car you can afford, deal with dealers, negotiate the best car price, benefit from buying used and figure out finance options.
For more information on finding the right new car for you, researching options and available local inventory, take a look at our AutoSmart webpage today!
Read other articles about car buying and auto loans.
And then visit Mid Oregon Credit Union before you even step on the lot. As a not-for-profit financial cooperative, we can approve you for an auto loan that fits your circumstances—and your budget. We won’t put you into a loan you can’t afford, and we’re happy to explain everything to you away from the high-pressure of the dealership. If you have a trade-in, we can help you determine a value for that, too. Or, call us at (541) 382-1795 or email to beheard@midoregon.com.