When I was seventeen my boyfriend bought his first car, a purple Alpha Romeo. It looked great, but a week later the alternator died, then the fan belt, followed by the radiator. Today, as a savvy car buyer, I know that buying a car is a critical financial decision. Here are the tips I wish I had known when I was a young adult about to buy a first car.
Consider How You Will Pay for the Car
Whether you plan to finance or buy your car in cash, there are downsides to consider. In a cash purchase you invest money on an asset that will lose value every year. In the case of a new car, it loses 25% of its value the moment you leave the dealership. On the other hand, if you finance your car, you will have monthly payments for the next 2 to 8 years, depending on the terms of your loan. Furthermore, your likelihood of qualifying for a loan depends on your credit history,and if you are a young adult it is probably blank. Therefore, expect a parent or guardian to be asked to co-sign the loan documents guaranteeing payment should you default.
What You Should Know About Buying a Used Car
Most buyers think that, if you have to finance your purchase, you must buy it from a dealership. That is false. You can go to your local bank and apply for a car loan after you’ve chosen one and have the VIN number and seller information. Therefore, look for cars sold by individuals, who don’t have the dealership’s overhead tucked neatly into the price. Ask how many previous owners there were and what the mileage is. The less the better on both.
The Truth About Paying for A Car Inspection
If you’re tempted to buy a used car without an inspection–don’t! I’ve had in-mint-condition cars fail inspection because an examination of the chassis revealed a prior, severe accident. This seriously depletes the value of the car and makes it difficult to sell in future. Furthermore, an inspection will test critical engine parts, the breaking system, the computer and steering to name a few. You can then negotiate the price of the car down for every flaw the inspection uncovered.
What You Should Know About Front and Rear Wheel Drive
Most young drivers prefer sporty looking cars that come with stronger engines and rear wheel drive. Such cars will slip in rain and skid so badly on ice until driving them in winter becomes impossible or, worse, hazardous. My old Nissan Z drove like a dream in summer, but in winter I could not even drive it up our slopping driveway to shelter it in the garage.
What You Should Know About Vehicle Warranties
If you buy a used car under 60,000 miles, your car will still be covered under the original manufacturer’s warranty. This means that any engine or major parts failures will be fixed for free at a certified dealership. However cars over 60,000 miles are no longer covered. You may choose to buy an Extended Warranty, and it’s best to get a quote before you decide on buying the car. (Test this quote tool from Fidelity.)
How to Factor in Car Insurance into Your Buying Decision
Car insurance prices vary depending on your age, driving record and the model and year of the car. If you are under the age of 25 your insurance rate will be higher. A newer car, though more expensive, will not necessarily prove more expensive to insure. Therefore, if you have several cars in mind, don’t buy them before you get an insurance quote and compare the prices. In addition, car insurance companies offer discounts on standard policy rates if you have an alarm system or anti-theft fuel cut-off switch. Most new cars come with these features. Ask the insurance company if they offer discounts if you take defensive driver courses, or if you sustain a high grade-point-average, which is a discount offered by State Farm to high school students.
How to Understand the True Cost of Fuel
New cars will come with gas-per-mileage numbers from the manufacturer. The higher number represents highway miles, the lower inner-city driving. Understand that these are optimal numbers. To determine the gas-per-miles for used cars, visit Edmonds for reliable information. Next consider the fuel octane of your car will take, and take a note of the fact that higher octane (91) is more expensive but is burned more efficiently, increasing the mile-per-gallon ratio. On the other hand, not all cars can burn higher octane fuels.
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