Personal Finance

New Car, No Regrets: When to Know You’re Financially Ready to Buy

Buying a new car? There are lots of things you need to check off your list. If you’re wondering whether it’s time, here’s what you need to know.

New Car Sales Booming

Buy New Or Used?

The first thing you need to think about is whether you want to buy something new or used. Think carefully about this one as it impacts a lot of your other decisions going forward. There are benefits to both options. Sometimes, it’s easier to find a vehicle that’s in your price range if you go used, but the prices have definitely creeped up on them.

A new vehicle might have updated safety equipment like back up sensors and collision avoidance systems, but it might cost a lot more than you’re willing to spend. Also, new cars tend to depreciate rapidly. When making a list of vehicles, consider what you’ll use the car for.

Will you commute to work and back or is this more of a “fun car?” Do you work from home? If so, why do you need a vehicle?

If you decide to go with a used vehicle, have your mechanic check it over to make sure there are no hidden problems. Make sure it’s got basic safety features like airbags, and antilock brakes. All newer vehicles have them.

How Will You Use It?

Your dream car might be a convertible or maybe a Porsche, but that might also not be practical. It might not be something you want to commute to and from work in. When making your list of cars, ask yourself what the vehicle will be used for most of the time. If it’s commuting through heavy traffic, then you probably don’t want a standard transmission, for example. If you’re driving four kids to school, sports, and other extracurricular activities, then you probably want something like a van or SUV.

Also, consider where you live. If you live in the north, for example, you might want 4-wheel drive during the winter. If you live in the south, you might not need it. Fuel efficiency also factors into this equation. If you get an SUV, you will probably be paying more for your gasoline than if you have a car.

Fuel Efficiency

Buying a hybrid vehicle used to be an easy decision. There weren’t too many models on the road to choose from. Today, it’s not such an easy choice. Choosing a hybrid or flex vehicle can lower your fuel costs dramatically, but they can also increase the base price of the car. There are some additional factors to think about too, like the fact that you can get a tax credit for buying a hybrid.

On the flip side, the total cost can be 20% more than a gas-powered vehicle. If you’re financing, keep in mind the additional interest you pay if you need to buy the more expensive hybrid or electric vehicle.


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