Buying a new car is a substantial financial commitment. After getting a house, a car is the next most significant purchase that most of us will make. Whether we are saving up to make that investment, committing to a financing deal, or even leasing a new model; a lot of consideration is needed before making the tough decision.

As a new car is an asset that depreciates quickly, it is important to try and future-proof our choices. Sure, that sporty little coupe may be a great idea for now, but what are your plans for the future? Will it still be suitable in five years’ time when you have a family? How long do you intend to keep the vehicle and what changes are likely to happen within that time frame? You will also need to consider the practical uses of the car.

Below are some thoughts to help you get started.

1. Decide On Your Requirements

When you’re making such an extravagant purchase, it’s quite easy to get carried away especially when you enter the dazzling showrooms with persuasive sales assistants. Coupled with the glossy brochures, it’s hard to resist the lure of the latest model. However, it could be a big financial mistake if you don’t carefully consider what your needs from the vehicle actually are. Functionality always needs to be the primary consideration for your purchase. First of all, think of how many passengers you may need to carry – is it just you commuting, or do you have a family situation where you may need to transport kids? Consider the conditions where you live – are ice and snow likely, or are the winters generally milder? Do you need an all-wheel drive? What sort of surfaces are you covering – off the road or paved surfaces – or minor roads in less good repair? How important is fuel economy to you? If you regularly cover long distances, you may need to prioritise this over other factors? Consider the car’s safety features too, especially if you’re likely to be driving young children. How much space for equipment and cargo do you need? And also, how much space for parking is available where you live?

2. Select Your Budget

Although it would be nice not to have to think of money, it does play a huge factor in determining the best vehicle for you. You don’t want to set your heart on a car based on other factors and then realise that the financing is way out of your reach. If you’re paying cash or from savings, you have a hard limit. But if you’re relying on taking financing out for your purchase, you need to be realistic about the deposit and monthly payments you can afford. As a general rule, no more than 20 percent of your disposable income should be going on a car payment each month. It may be a good idea to check your credit rating before applying for finance – your credit score can affect the rates you get offered, which in turn will impact what you can afford. Think about what you could do to reduce the upfront price – for example, could you time your purchase for just before a plate change, when current-year-old-plate models are reduced? Could you look at manufacturer approved used cars of 2 years old or less? Or could you see if your local showroom is planning to sell off ex-demonstrator models or has any upcoming promotions on the purchase price? All of this can really help to cut the cost – register your interest with the dealership early to be alerted to any offers. Some websites will help you go in armed with the latest information by letting you see the average price paid for the make and model you’re looking out. Remember it is possible to negotiate even on a new car sale – try to time this towards the end of the month when sales assistants may be more desperate to hit their sales target.

3. To Lease or To Buy?

If you are financing the purchase, you need to decide what route to go down with the money, as there are usually several schemes open. Look at the various APR rates offered by the dealership, and compare them to a loan you may be able to get from your bank, in case this would cost you less overall. If you do decide to go with dealer financing, there are two main options – buying, or leasing. Each has their separate pros and cons, so you need to choose which is right for your personal circumstances. If you don’t have much cash available for a deposit, leasing requires a much smaller upfront payment than a purchase agreement. There are also lower monthly payments, but you will not own the vehicle at the end of the arrangement, and you will have to agree to a ‘reasonable usage and wear and tear’ clause that may not be suitable if you do a lot of mileage. However, with depreciation taken into account, sometimes leasing is the best option. Buying the car is more expensive initially, but if you believe you will be able to achieve a good resale value, it could be the better option. Are no-trade-in and hassle-free swaps your style? Or do you need more flexibility to sell the car as and when you need and have control over what modifications to make to the vehicle?

4. Consider Similar Vehicles

You may have set your heart on that Subaru WRX or the BMW X5 but setting your heart on a specific model is not the best idea. The marketplace changes all the time with new models arriving, so the perfect vehicle for you may be just about to launch. Find comparisons of vehicles in the same class as the one you’ve got your eye on to make sure you are getting the best deal for your needs. Compare the features, specifications, and pricing of each model or look at new car buying guides if you’re not sure where to begin.

5. Find Out the True Cost of Ownership

A little internet research at the pre-purchasing stage could save you a lot of headaches further down the line. For example, did you know that some cars which are cheaper to purchase initially could end up costing more later on? Maintenance costs and average depreciation all need to be factored into your decision. Before committing, make sure you have an idea of the cost of ownership of your new vehicle. Car insurance and fuel costs are also an issue to be considered. Making a clever decision here could actually save you thousands.

6. Scope Out The Market

You don’t have to go to dealerships to find out this information anymore. Most dealers now offer a list of inventory via their website so that will help you to get a picture of what models and options are in stock before you go down. It may be worth travelling further if a particular dealership has an offer running on the model you want.

7. Set Up A Test Drive

A lot of things can change on a test drive. The vehicle you thought was perfect for you can turn out to have features you don’t like or handling that you don’t prefer – and if you’re comparing two or three similar models – like the Mercedes GLA vs. Audi Q3, for example, sometimes after driving them gives you a clearer pictures of which is a winner. Call or email your local dealership to schedule a test drive, and if you can drive all the models on your shortlist on the same day, it saves you a lot of time. Making an appointment is much better than just turning up ad-hoc, as you are sure the car is prepped and waiting for you. Before you go, take a look at some walk-around videos of the model you’re interested in and make sure to go through all your notes on pricing and features so that you can check details with the salesperson on the day. The best test drives allow you to put the vehicle through its paces exactly as you would in your
daily use – so don’t be afraid to specify if there’s a particular condition you’d like to test the vehicle in. If you’re commuting, try to test the vehicle out in both slow-moving congestion and faster paces. Get in and out of the car several times and if you’re planning on carrying passengers, don’t forget to sit in the back and see what its like there. Check the cargo space and ease of loading, and if you use a child seat, bring it along to test how easy it is to fit and remove.

8. Making a Final Decision

Don’t be afraid to request another test drive if you feel you need it. If a salesperson is distracting you with their chatter, you can request to come again. It’s only right that you be allowed to focus on evaluating the driving experience for such a big purchase. There could be several good choices, so you’d be wise to sleep on any major decisions and not feel pressured into signing up for anything too quickly. Your decision should be made to last!

Know of any other tips or tricks to look out for when buying a car? Share them with us by commenting below!


Melvin is an Entrepreneur, Life Coach, and Chinese Metaphysics Practitioner. He holds an EMBA and he is a passionate and engaging teacher, known for his unique combination of science, research, and spirituality.

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