New year…new beginning…new car?
It’s the new year and as the credit crunch tightens its grip and the demand for cars decreases, the market is being flooded with fantastic deals. But should you take advantage of these bargains out there or should you wait first? It’s a new year right, so why not?
Buying a new car is always expensive. What’s more, during a credit crisis the number-one rule is to decrease your debt, not increase. However, now is a good time to buy a new car given the extremely competitive trading environment, and people always say to wait till January to buy a new car.
But carefully consider your personal financial circumstances and overall disposable income first. In actuality, the only good time to buy a new car is if you can afford it. And if you can, it’s only necessary if your current car is no longer reliable or older than 5 years.
Answer these questions and do the math:
Before taking up any deals you should look at your personal finances carefully.
-Is your current car still in good condition?
-Is it paid off?
-How much money have you spent on it recently and how much are you likely to spend in the near future?
Also balance the outstanding amount on the existing loan against the market value of the trade-in. Will the deposit required on the new deal be financed from the trade-in or from personal savings? Once you’ve answered these questions, it should be easier to decide whether a new car is necessary.
If you’ve answered the questions and still think buying a car is a good ides, have a look at our top tips for buying a new car.
Also think about the following:
Balloon payment or not? Balloon payments allow you to reduced monthly installments, but results in the break-even point to be extended significantly. Customers often forget about the balloon payment at the end of their contracts.
New or Used? Used cars seem cheaper than some new cars but you need to consider that the cost of maintaining a used car will add up in the long run, whereas most new cars come with a maintenance or service plan. Depending on where you buy your pre-owned car, there is a possible option for a maintenance or service plan.