A new car is fun and exciting, as long as you avoid breaking the bank for it.
The temperature is rising, the sun is bright, and it’s fun to get in your car and go out on a road trip. Many Americans this time of year purchase new or used cars, and a question I get asked often is “Should I buy a new car?” or “Can I afford a particular car?” And while it is generally considered rude to answer a question with a question, I don’t answer this one with just one question, but with several questions! (and I beg forgiveness for being impolite) Here are some questions you should consider as you look to purchase a vehicle.
How do you plan to use your car? Is your car going to be primarily for commuting and running errands? Do you plan to take long road trips – if so, how many? Will you be using the vehicle in rough terrain? This gives an idea of how many miles you may put on the car annually, and under what conditions/stresses the vehicle may have.
What features do you NEED to have, and what features do you WANT to have? Before getting caught up in price, think carefully about which bells and whistles are actually important to you. If you have your hands full often, having a vehicle where the trunk opens up automatically may make life a lot easier. If safety is a primary goal, then looking at crash test ratings and making sure the car has sensors to detect traffic might be more important. Write out a two column list – one of wants, and one of needs, before you go shopping.
Look at your budget and figure out what you want to spend. Notice that I did not just say “afford,” but what resources do you actually want to dedicate to transportation Keep in mind that it’s not just about a car loan to repay, but you also need to consider the gas, oil changes, tires, brakes, and other periodic repairs over the life of the vehicle. What you are willing to spend each month in total will determine what you can actually afford in terms of the price of a vehicle.
Consider older vehicles in your decision-making. While there is a fair amount of advice surrounding getting a vehicle that is 2-3 years old (when most new leases expire) there are now more buyers than before buying at that age of vehicle. Vehicle quality has improved over the years, so keep in mind vehicles that are 5 or 6 years old that have been mildly driven as an option. In many cases, you can save 30% off of the 2-3 year old car price this way, let alone lower insurance costs. It does take more shopping to find some of these deals, so be ready to put some time in doing research online, but the payoff can be thousands of dollars shaved off the cost of your next vehicle.
Finally, shop online and have a detailed plan before you ever set foot in a dealership. Be aware that dealers know that you shop online; many salespeople will try to distract or disrupt your thought process on the lot to regain control of your thought process. They know that if they can recapture you in an emotional/reactive state, they can sell you what they want to sell you, and not necessarily what you actually came there to buy. By doing your homework and/or buying the car online, you can be better prepared to make this transportation and financial decision for all the right reasons for you.
It is so easy to spend on that shiny, bright new car with features you didn’t even know you needed, and that makes you feel really excited, in that moment. Allowing yourself to calm down emotionally so that the rational part of your brain can provide input helps temper those emotions. This will make sure that from the things you want and need in the car to the price you want and need in your budget, your purchase fits and serves you the best way possible.
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Finally, if you feel that working with a financial coach could help you stay on track in reaching your personal financial and investment goals, schedule a free consultation or email me at steven@briggswealth.com – I would love to meet you!
