First-Time Car Buyer? These Tips Might Actually Save You From a Major Headache
Buying a car is an exciting achievement. Nothing says adulting like having your own car. The freedom of being able to drive to your errands and the bestie’s without having to tell anyone. But. do you know what to do before you buy a car? There are so many things you need to consider before you take the jump and buy a car. Here are a few tips to keep in mind when you are getting ready to go to a dealership to buy your new car.
Decide if it is better for you to buy a new or used car
When buying a new car it is always good to decide if it is better for you to buy one new or used. Buying a new car comes with some advantages, like the newest technology, full warranty, and better safety features. That said, the disadvantages of buying a new car is the immediate and rapid depreciation of the car. According to CarFax, a new car can depreciate very quickly, losing up to 50 to 60 percent of its value in the first five years. So, if you buy a new car for $30,000 today, that car will be worth $15,000 to $12,000 after five years. The depreciation does even out after that with a much smaller drop in value year after year after five years.
Buying a used car comes with its own advantages, starting with a lower price point. Used cars also usually come with lower insurance rates and reduced registration fees. The depreciation of used cars is much smaller, which means that it holds its value better than a new car. There are risks with used cars, including unexpected maintenance costs and limited to no warranty options.
Leasing to own is a great option if you are just starting out
For some people, the right move is to start with leasing a car. There are some benefits to leasing a car if you aren’t ready to own immediately. For one, leasing a car gives you less responsibility on car maintenance issues. If the car is leased, the dealership still has a financial stake in the car and routine maintenance is usually included in the lease agreement. Imagine having the freedom to get your car’s routine maintenance covered by the dealership?
Leasing a car also makes the monthly payments lower than buying a car outright. If you really love the car, you can still buy it at the end of the lease. This way, you can get to know the car and see if you are really in love with it.
What are the pitfalls of leasing? One thing to be mindful of when leasing a car is how much you drive it. Lease agreements come with annual mileage limits, and going over will cost you when you take the car in at the end of the lease agreement. So, if you are someone who drives a lot and needs extra mileage, the monthly cost of the lease will go up to account for the extra mileage.
Another potentially larger cost is insurance. Believe it or not but you might be saddled with higher insurance premiums. The insurance that is typically required when leasing a car has to cover several things since the financial entity wants to make sure the car is covered. According to Travelers, you need to have full coverage, which requires collision and comprehensive coverage. You will also probably need to have gap coverage which would cover the value of the car versus the amount left owed on the car.
