When it comes to the big expenses in your life, buying a car is one of them. While not nearly as big of a financial commitment as a house, you often will still need to take out a loan in order to afford a decent, safe vehicle to drive in. However, you don’t want to go into a dealer and pick up the first car you like. You need to make calculated decisions and know a few key things in advance so that you not only get the best car for you and your budget, but you get the best deal as well:
Whether You Should Buy New or Used
The first decision you need to make when it comes to buying a car is whether you want to buy a new car or a used one:
Pros and Cons of Buying a New Car
New cars are popular due to their advanced safety and luxury features. They will always have the best in terms of technological advancements. They also have no mileage on them meaning you can drive them perfectly for longer. Another benefit are the warranties that are offered by the manufacturer, which cover a wide range of defaults that you can then get fixed for free. The downsides, of course, are directly related to the high depreciation rate assigned to vehicles. As soon as you drive a new car off the lot, it is not as valuable as it was before. It means that if you decided to sell it the next day, you would not make your money back.
Pros and Cons of Buying a Used Car
To begin, you should never buy a used car from an individual unless you understand cars and know what to look for regarding defaults and internal issues. Doing this is a great way to waste your money, because you have no guarantee on how well the vehicle will hold up, regardless of how good it looks on the outside. Instead, choose a used car from a dealership. These cars will have to have been certified for use, so you don’t have to worry about it breaking down on you when you drive it down the street. If you find a newer model, you might even be able to benefit from the original warranty on the vehicle itself, and, of course, you can enjoy a lower price point due to depreciation.
Budgeting for Your New Car
As for car down payment tips, the best thing you can do is start saving. The more you have saved, the less you will have to pay off later and, more importantly, the better your deal will be. This is why it is recommended that everyone opts to pay at least 20% down for their vehicle. 10% is acceptable, but you do have to be careful as the interest rates could mean you end up paying more for the vehicle than it is worth. Try to negotiate the price of your vehicle down as much as you can so that you can offset the interest rate and enjoy a car no matter how much you have saved.
Buying a car is a big deal because it is a big purchase! You don’t want to make foolish mistakes. Instead, do your research, and choose a make and model that fits your budget and will last you as long as possible.