So You Want to Buy a Car?
Most households in the United States have access to at least one car, 91.7% according to Forbes.com. If you’re trying to join them and looking for a car yourself, read this post for tips, tricks, and overall advice to guide you through the sometimes nerve wracking, but hopefully rewarding, process!
Prepare, prepare, prepare. Buying a car is a decision that should not be taken lightly. The goal is to find something that gets you from point A to B without breaking the bank. Before even entering a dealership you should know if you’re looking to buy a car or lease a car. What’s the difference? Simple, when you buy a car it becomes yours to sell, total, or drive for as long as you’d like! When you lease a car you will make car payments for life but have the ability to upgrade vehicles frequently. Here’s a little chart to help break it down:
|Requires more money up front, and each month until fully paid off.||Costs less up front, but payments are never ending.|
|Usually costs less over time.||You can get a tax break if you use the car for business purposes.|
|Car’s value depreciates as soon as you drive it off the lot.||You’ll owe fees for exceeding annual mileage limits or any damage to the car.|
|Have the freedom to sell or trade whenever.||A lease contract is difficult and expensive to break.|
|It’s yours to sell, total, or drive for as long as you’d like.||Can upgrade to the newest model every couple of years.|
If you’ve decided you’d like to be a car owner, that’s great! There are a few more decisions to make.. 1. Are you willing to take out a car loan? These loan types depend on your personal credit score, the price of the car, and the length of the loan itself. If you’re not, the next two steps are for you. 2. How much are you willing to spend on a down payment? A down payment can typically range anywhere from 5 – 20% of a car’s total price, remember… the more you put down, the better! 3. How high would you like your monthly payments to be? This payment should fit into your budget without causing you undue stress. Here’s a calculator to help you estimate that expense!
Now you’re a car owner! Congratulations, but don’t forget cars come with many hidden expenses. For example, where are you going to park it? It is constantly going to need gas and maintenance repairs. Additionally, you need to register the car and obtain car insurance. If I still haven’t scared you off – you are ready. Goodluck with this next financial step and enjoy your car!
Written by Kim T., Peer Educator