Buying a car is one of the biggest purchases you will make in your life, so you want to make sure you do your research before committing to anything. New car or used car? There is a lot of debate on that matter, and reading a little on the topic can be interesting before you make a decision.
People in favor of buying a new car argue that if you keep it for the long term, you can be sure it has been properly maintained, and it can last for over a decade. However, if you plan on selling your car quickly, after a year or two that is, you are likely to lose money. In this case, if you still want to enjoy the hassle-free advantages of a newer vehicle, you might want to look into leasing a car rather than buying one. Buying a new car will save you money in maintenance for the first few years, but the higher value means you’ll pay more in insurance.
Used car enthusiasts generally mention the lower cost of acquisition, lower insurance premiums, and general savings. But you have to factor repairs, maintenance, and the older models may not be as efficient when it comes to gas mileage. A reliable old car that is properly maintained however, shouldn’t give you too much trouble. Cars tend to lose the most value over the first three years, so buying a car that is 3-5 year old can be a good compromise between old and new.
Now you need to look into financing. If this is not your first car, you are probably used to it, however, first time buyers need to understand the costs involved with financing a car.
Applying for a car loan with no credit might be possible, although since it is a bigger risk for the lending company, you can expect higher interest rates. In any case, this might be an easier solution than asking a family member to co-sign the loan and getting into a tricky situations if things get complicated.
If you have good credit, you should be able to get a much lower interest rate. Even if you can afford to pay cash for a car, with interest rates so low these days, and some dealers even offering 0% financing, it can be worth it to finance a car. Look at the overall cost of the loan, including all monthly repayment plus any additional fees to compare with the cash cost. And most importantly, make sure you can afford the monthly repayments. The last thing you want is to have your car repossessed because you stretched yourself too thin.
Other things to look for when buying a car include insurance premiums, for which you can do an easy comparison online. Can you afford it? What is the rate for the minimum cover impose by law, and the all inclusive package? You should also look for ease of repairs. Some new brands use generic spares which are easily available, but some mechanics will not work on them. How far is the nearest workshop that will oversee your car? How much are oil changes and annual check ups? All of this will add up to the overall cost of owning a car. Make sure you can amply afford all the associated costs, so you don’t have to sell your car for a loss after a few months.