5 questions to ask yourself when buying your first car
Credit: North Loop
Owning a car has a bigger significance than just its functionality. In fact, a lot of car owners believe that the type of car they drive defines their personality and social status. It’s no surprise that people purchase cars without adequate financial planning, and this car pride factor can tempt people into purchasing a car way beyond their affordability. Rather than buying a car that carries out one’s basic needs, a lot of people focus on the brand, brand value, and pride of ownership instead, and this can often lead to decisions all over the place.
Before buying your first car, these are the 5 questions you need to ask yourself-
1. Can I afford the monthly installment?
The first question you need to ask yourself is whether you can afford your car’s monthly payment or not. You need to make a decision taking other factors into consideration, such as your rent, household expenses, utilities, and any other outstanding loans or EMIs. Only purchase a car whose monthly installments you can afford, or instead, calculate and create a budget for a new car and only then explore your options in-line with your budget. Also, take factors such as job stability and future contingencies into consideration before buying a car.
2. Can I afford maintenance?
While buying a car, do not consider expenses only in the form of the car loan EMIs. Maintenance costs are also a significant factor that would require you to make allowances for before buying a car. The cost of maintenance increases as the price of a vehicle increases, so do some research and ensure that you’re aware of the maintenance costs of a vehicle before purchasing the same. A vehicle should only be purchased if you can only afford both, the monthly payments as well as maintenance costs.
3. Are you paying for features that aren’t really necessary?
Cars come in different variants and some cars have more extravagant features than others, some that may not be really necessary. Are features like seat warmers, foot massagers, and fancy navigation systems must-haves? Or can you make do without them?
You would also have to make similar considerations in the case of the size of a vehicle. If you’re living all by yourself, is it worth buying an SUV or a seven-seater? It would obviously be smarter to buy a hatchback or a sedan in that case, which would imply that the cost of the vehicle would be cheaper and that the maintenance costs would be lesser too.
4. Is it worth buying a new car or a used one?
Cars have high depreciation rates, and the second you drive the car out of the showroom, the vehicle would’ve already lost close to 10% of its value. Keeping this in mind, do your homework and figure out if buying a second-hand car would have more value than buying a new one. Find a certified car dealer and evaluate your options. If this dealer is trustworthy, you should consider buying a second-hand car to save a lot of money.
5. Should I own a car or is leasing one better?
Leasing a car has its own set of advantages, and one of the pros of leasing is that you can offload a car as soon as it shows signs of wear and tear. You’re not at the receiving end of a car’s depreciating value and high maintenance costs. However, leasing has its own set of cons too, so analyze your options and make a decision wisely.
The first question you need to ask yourself is whether you can afford your car’s monthly payment or not. You need to make a decision taking other factors into consideration, such as your rent, household expenses, utilities, and any other outstanding loans or EMIs. Only purchase a car whose monthly installments you can afford, or instead, calculate and create a budget for a new car and only then explore your options in-line with your budget. Also, take factors such as job stability and future contingencies into consideration before buying a car.
2. Can I afford maintenance?
While buying a car, do not consider expenses only in the form of the car loan EMIs. Maintenance costs are also a significant factor that would require you to make allowances for before buying a car. The cost of maintenance increases as the price of a vehicle increases, so do some research and ensure that you’re aware of the maintenance costs of a vehicle before purchasing the same. A vehicle should only be purchased if you can only afford both, the monthly payments as well as maintenance costs.
3. Are you paying for features that aren’t really necessary?
Cars come in different variants and some cars have more extravagant features than others, some that may not be really necessary. Are features like seat warmers, foot massagers, and fancy navigation systems must-haves? Or can you make do without them?
You would also have to make similar considerations in the case of the size of a vehicle. If you’re living all by yourself, is it worth buying an SUV or a seven-seater? It would obviously be smarter to buy a hatchback or a sedan in that case, which would imply that the cost of the vehicle would be cheaper and that the maintenance costs would be lesser too.
4. Is it worth buying a new car or a used one?
Cars have high depreciation rates, and the second you drive the car out of the showroom, the vehicle would’ve already lost close to 10% of its value. Keeping this in mind, do your homework and figure out if buying a second-hand car would have more value than buying a new one. Find a certified car dealer and evaluate your options. If this dealer is trustworthy, you should consider buying a second-hand car to save a lot of money.
5. Should I own a car or is leasing one better?
Leasing a car has its own set of advantages, and one of the pros of leasing is that you can offload a car as soon as it shows signs of wear and tear. You’re not at the receiving end of a car’s depreciating value and high maintenance costs. However, leasing has its own set of cons too, so analyze your options and make a decision wisely.
Things to look for when buying your first car-
Some of the main things to look for when your first car are-
1. Maintenance Costs- The first thing you need to look at is the cost of maintenance, such as oil change, spare parts, repair, etc. Being your first car, the vehicle is very likely to pick up dents, scratches, etc., so ensure that you would be able to afford to pay for these expenses.
2. Resale value- You may upgrade your car after a few years, and you may be using this car to finance your garage refresh. Some brands have high resale value than others, so ensure that you zero in on cars that have a high resale value so that you can save a few bucks while upgrading your car in the future.
3. Petrol vs Diesel Options- Diesel cars, though costlier than their petrol counterparts, are preferred by buyers as they give better mileage and the fuel price is cheaper. So make sure you do a proper comparison before buying a particular variant.
4. Associated costs such as road tax, insurance premiums, accessories charges, etc.
1. Maintenance Costs- The first thing you need to look at is the cost of maintenance, such as oil change, spare parts, repair, etc. Being your first car, the vehicle is very likely to pick up dents, scratches, etc., so ensure that you would be able to afford to pay for these expenses.
2. Resale value- You may upgrade your car after a few years, and you may be using this car to finance your garage refresh. Some brands have high resale value than others, so ensure that you zero in on cars that have a high resale value so that you can save a few bucks while upgrading your car in the future.
3. Petrol vs Diesel Options- Diesel cars, though costlier than their petrol counterparts, are preferred by buyers as they give better mileage and the fuel price is cheaper. So make sure you do a proper comparison before buying a particular variant.
4. Associated costs such as road tax, insurance premiums, accessories charges, etc.
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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.
