1. Don’t Focus on Monthly Payments
Most people opt out of buying a car once they see what their monthly payments are going to be. Instead of thinking how much you spent on it altogether, you should instead focus on what kind of asset it means to you and your budget. Think how much revenue it can bring into your budget for work, instead of how much it’s going to spend in your budget every month.
2. Financing or Buying a Car Outright
Buying a car outright has its perks. For example, you won’t have to include monthly payments into your budget or worry about the interest you’ll have to spend every month on your purchase. Not to mention, insurance will be much cheaper than financing.
However, financing a car can be cheaper for you in the long run if your interest rates are low. This way you can spend more money on other investments that give you a better return than the loan.
3. Know the Depreciation of Your Car
It’s important to know that your car will lose 20 percent of its value as soon as you drive it off the lot. This is a huge reason why you should never buy a brand new car, but even older cars have nearly the same amount of depreciation. In your car’s first five years you will notice the largest drop in price depreciation.
However, cars that are more high-end depreciate much faster than regular cars that you see being advertised at a dealership.
4. Think About Service Costs
Though you may be focused on the upfront costs right now, you will also want to consider the service costs that will follow once you choose your car. This can include things like gas, oil, maintenance, and insurance. Though a car may be cheaper up front, you may end up paying for it later. You can avoid this by doing thorough research ahead of time. Try to determine how reliable the car will be and how much you will need to pay for repairs and regular maintenance. You should also search for cheap auto insurance quotes online so you can get the best deal on your coverage, too.
5. Think About The Resale Value
Though you may not want to think about selling your car before you even buy it, it can be helpful when trying to stay on budget. This is great for emergency planning for situations where you will need to sell your car quickly. This may be the case if you are offered a new job in a different country or your financial situation changes. In situations like these, you will be thankful that you took the resale value into consideration.
As we talked about above, cars depreciate in value almost immediately. This means that you will never get back the money that you put into it. However, you will naturally still want to get the most for your car that you can. Check out the value of past models of the cars you are considering to see how well they last over the years. When it comes down to it, you should also opt in for the high level of the car over the base model. Though the resale value of these models is virtually the same, you can sell your car a lot faster if you choose the special features. Plus, you get to enjoy all those features while you are still driving your car.