When Should I Make A Car Purchase?

A car purchase is a big decision! Huge, actually. The average new vehicle in the United States in 2015 was $33,000 or more…yikes! Sometimes it feels like we need a new car. Most likely, we could make do with fixing the one we have. This post aims to discuss the variables. Let’s face it. Most people know they aren’t buying a new car to save money. A new car adds convenience and comfort to your life and everyday routine. For some, that is worth a lot. Maybe, it is even priceless!

New vs. Used – When Should I Make A Car Purchase?

Nothing is quite that simple, is it? If we all do the math, we should all come to the same conclusion. Which is that a car that is 2-3 years old with low or average miles is one of the best values around. This type of car is still basically new in many ways. Some may even have part of a warranty in tact. The most appealing thing is that the car is not “brand” new anymore. It has already depreciated the customary 25% or more that it does the second it is driven off the lot. Some poor guy already took the hit for you. Unfortunately, many decisions aren’t as cut and dry as “doing the math” – whatever you choose, make sure it is well thought out. Think through the pros and cons and don’t let your ego or greed get in the way.

Loan vs. Cash – When Should I Make A Car Purchase?

Everyone knows a loan will cost you, but many of us still use (and need) them for big purchases. All loans aren’t equal. If you get a loan, shop around. Don’t let a dealership bully you. Look for a better interest rate and put as much down as you can to lower your monthly payment. It may seem impossible, but people still do pay cash for cars. Cash is king. If you have it, don’t hesitate to ask for a better deal and bargain. It costs the dealership less money for you to use cash. A car purchase is in EVERYONE’s future. It may be 2, 5 or 10 years down the road, but you eventually need a new one. With that in mind, set aside a small amount every month for your car fund. You could be paying for your next one in cold hard dollars!

Timing – When Should I Make A Car Purchase?

Keep in mind that acquiring a car loan will greatly impact your debt to income ratio. Many people spend as much on their cars per month (payment, interest, gas, insurance) as they do their homes. Don’t let a fancy new car (and a fancy new payment) limit your dreams of a home purchase or the need to fund retirement or an education. It is important to think through the implications of the total cost. This includes how much you are spending overall (including interest) and not just how much you are spending each month.

No matter how you look at it…there are many ways to acquire a new car. Make sure you are making the right move for you and your family!