Financial Considerations to Make When Buying a New Car
August 4, 2023 by Mark Allinson Leave a Comment
Buying a new car isn’t always the most straightforward endeavour. More often than not, shopping around for a new or used car ends up being a lengthy, back-and-forth process which requires plenty of key considerations.
The most important thing, however, is that you handle your car shopping process with careful financial planning. But sadly, with hidden costs aplenty and car dealerships acquiring an infamous reputation as places that are likely to try and swindle you, making sure that you practice tactful spending when buying a new car is easier said than done.
Thankfully, however, being aware of the costs that you can expect from your car purchasing process can help you plan accordingly. This means budgeting for your car registration, roadworthy testing, and comparing car insurance quotes, amongst other financial considerations.
Let’s explore some of these top financial considerations in-depth to help you better prepare for the purchase of your next car.
The first thing you’ll want to do is just equip yourself with a strong idea of what you’d want from your next vehicle. Getting the best deal from your purchase begins with knowing what it is you’ll actually need.
Do you want any particular driver technology like parking cameras or cruise control? Are you looking for additional cargo space? How about towing capacity? Did you want to install a bike rack or surfboard rack to your roof?
Honing in on your personal needs is undoubtedly one of the biggest budgetary considerations you can make when it comes to purchasing a car as it can help you avoid splurging unnecessarily on any features that you’re unlikely to use. Car salesmen tend to get many of their customers on those ‘add-ons’ and ‘perks’, after all.
Alongside outlining your own needs, you’ll also want to make sure that you’ve taken into account the needs of your family members, or any other people who may be driving or using the new vehicle. Do any of your family members have accessibility needs? Do your kids need extra trunk space for their toys?
And if you have new drivers in the family who may come to use the new car in time as learner drivers, then you’ll need to ensure that the vehicle isn’t prohibited by their probationary licence.
As we mentioned earlier, it can be deceptively easy to get lost in the hidden costs associated with buying a new car, so ensuring that you have a budget which accounts for all expected costs can help you go the distance, so to speak.
For example, if you are buying your car from a private seller then motor vehicle duty rates will not be included in the total cost of purchase, so ensure you budget for it and don’t get caught out!
You will also be required to purchase car insurance for your new car in order to drive it legally. Furthermore, if you are looking into used vehicles, a Certificate of Roadworthiness is required whenever a car is resold, which can often be another hidden cost.
Some cars may already come with a roadworthy certification, but if the current registration has lapsed on a vehicle you’re looking to purchase, then chances are you will need to factor in the costs of securing a Certificate of Roadworthiness with a licensed mechanic.
Although cars are always considered to be a depreciating asset, it’s important to keep in mind that not all cars depreciate at an equal rate. There will always be some cars that depreciate at a slower rate than others.
So if reselling your car is something you’re thinking of doing in the long term, there are a few ways that you can be proactive about maintaining its value.
A good rule of thumb when buying a new car is to opt for colours that have a broader appeal or are easier to find spare parts for. This typically includes colours like black, white, and silver. Similarly, there is also a far larger market for automatic transmission when compared to manual.
And as you may already know, new cars drop sharply in value after their first few years on the road. That’s why many opt to buy a slightly older car or a car that’s being sold by its first owner, as these vehicles are considered to be at a ‘sweet spot’ in their purchase history where they’ve depreciated enough to be resold once more at a reasonable rate.
Of course, when it comes to reselling, the general nick of the vehicle is important too – fewer kilometres, well-maintained interior/exterior and regular servicing through the lifespan of your vehicle will all help keep its resale value a lot higher over the long term.
Speaking of the ‘long term’, all car shoppers should not forget to factor in the running costs that they can expect from any vehicle that they’re looking to purchase. And yes, this figure can change from model to model as different cars use different fuels or source spare parts from different locations.
All of your shortlisted car makes and models can have large variations when it comes to factors like fuel-efficiency, vehicle repairs and the spare parts you’ll be likely to source. It can certainly make sense to pay close attention to which are the cheaper options on this front.
You should also consider the reported reliability of the vehicle you’re looking to purchase. For example, if there are any models that have records of particular operational concerns (like transmission issues).
If your vehicle ends up needing regular unexpected repairs or a routine sourcing of spare parts like replacement transmissions, then the expenses associated with owning your vehicle can run up fairly quickly, even with a cheaper purchase price.
Finally, there’s certainly no harm in going bargain hunting if you have your sights on a particular car model and want to find the best value sale price available to you.
If you’re flexible with the timing of your purchase then it is always a good idea to shop during the beginning of a new year as last year’s models become discounted or come with extra features at no additional cost.
It’ll always pay to become an expert at the art of haggling too. It’ll help to do all your research on your preferred vehicle before you head into a dealership, just so you can present yourself as a knowledgeable and conscientious buyer.
And if you are shopping from dealerships, be sure to visit more than one and get written quotes from each – then, go back and see if they’ll beat each other’s prices.
As you can see, there are many considerations to make when attempting to get the best deal out of the vehicle you purchase. And getting your ducks in order, budgeting properly and knowing all the ins and outs of vehicle purchasing will help you to get the right car for your needs – and all without breaking the bank.
That being said, it’s wise to not let a purchasing opportunity pass you by just based on financial considerations alone. Whilst working within your budget, it’s important to make concessions where necessary to get the car which best suits you and your needs.
Making rash decisions now or gravitating towards options which seem cheaper but won’t fulfil your needs will eventually result in more expenditure down the line. Doing your research and having a strong understanding of exactly what you and your family need will guide you toward the best and most financially sound decision possible.
Filed Under: Transportation Tagged With: car, considerations, purchase, vehicleBuying a new car isn’t always the most straightforward endeavour. More often than not, shopping around for a new or used car ends up being a lengthy, back-and-forth process which requires plenty of key considerations.