Table of Contents
Introduction
Buying a new car can be exciting, stressful, or a mixture of both. It can be exciting if you know what you’re getting yourself into, and it can be stressful if you have no idea where to start. There are many different things to take into consideration when buying a car. Here are four important factors to consider.
Your Budget
Buying New vs. Used
Buying a car can get pretty expensive, whether it’s a brand new car or a used one. Most people say that when buying a new car, you should aim for 20% of the total price as a down payment. If you can’t afford that, then you should purchase a less expensive car or a used one.
Buying new and used both have their pros and cons. You save more money buying used than you do buying new but most used cars don’t come with a warranty. You also tend to need fewer repairs with newer cars, but they are way more expensive than used cars.
Leasing
When leasing a car, you’re paying a financial institution that has paid the dealership to use the car. There are pros and cons to leasing too. The monthly payments are significantly lower than if you were to buy a new car, and you’re free to sell the car and lease a brand new car every few years. However, it may be hard and/or expensive to break a lease once entered, and you’ll spend more money in the long run.
Financing
How do you plan to pay for your car? Most people don’t buy cars right out— unless it’s a used car, but there are financing options for used cars too. One thing to know is that you do not have to receive financing through the dealership. Banks, credit unions, and other financial institutions are able to finance cars. But there are other factors that contribute to financing a car.
Credit Scores
Your credit score matters when it comes to buying and leasing a car. Ranging from 300-850, credit scores that are 710 and higher will usually see the better financing rates, while 640 and below will see the worse rates; those with a score below 550 may not even be able to get financing at all.
Safety
Many people may choose to overlook this in lieu of pricing, but car safety is an important factor to consider when in the market for a car. This list from USA Today lists 23 of the safest cars and SUVs in 2020. These cars were evaluated on how well they protected people inside the car, as well as how well they protected pedestrians— based on their emergency braking systems.
Another thing to keep in mind is that no matter how safe your car is, it is still important to do routine safety checks and regular maintenance. Every car needs to have the oil changed, tires rotated, etc., and it’s important to get your car serviced on a regular basis.
Insurance
In the event of an accident, car insurance protects you from a great financial loss. Car insurance companies allow you to pay a premium on a monthly, annual, or even semi-annual basis. Insurance rates on cars vary by state, make and model, and the year of the car. You can look up which kinds of cars are the most expensive to insure but to get the most accurate depiction of what your rates will be, you’ll need to compare car insurance rates.
Conclusion
Your financial situation may be the biggest determining factor of whether or not now is the time for you to buy a new or used car, or to lease a car. Insurance rates may also be different for leasing a car, as opposed to buying one. Consider all of the pros and cons of every option, with your financial situation in mind.
