Buying a New Car
There are many pros and cons to buying a new car. Below, I attempt to outline some of the most important factors to consider before you decide which car is best for you.
Depreciation is the value cars loose after you drive them off the lot, different cars depreciate at different values. Some cars have a high depreciation rate, and some have a low depreciation. Potential new car buyers research the depreciation schedule of the car you are interested in.
Depreciation will not affect you much if you plan to keep a car for several years, and you will eventually get the value for your car. But if you change cars in a few years you will be affected and may even lose money.
In the past, if a new car was in an accident you could lose money due to the difference in what you owe versus the depreciated value, this happens if you don’t put down a large down payment. Now, there is something called gap insurance, that you can purchase when you buy your new car and put down a low-or-no down payment.
There are many ways you can research the depreciation of the car you are interested in, by searching the many car analysis websites, before you decide on a car.
According to Edmunds, one on the many car analysis websites, on average a new car loses 11% of its value the minute you drive it off the lot. During the first 5 years, the average car depreciates by 15%-25%. After five years the average car is worth 37% of what you paid for it at the dealership.
THE MOST EXPENSIVE WAY TO BUY
A new car is the most expensive way to buy a car when you consider the price of the car is at the top, and you must pay new car warranty service, insurance is the most expensive due to the loan value and replacement cost, and car registration or taxes are at its highest.
New cars have a warranty for the first year, and most have additional warranties for major items that go on for 5 to 10 years. To keep your first-year warranty active, you must get warranty inspections, usually about every 3 – 6 months. Maintenance schedules vary according to make, model, and car manufacturer, your dealer will give you the maintenance schedule.
A major area many inexperienced new car buyers forget to include in their budget is the cost of the new car warranty service. Get this information from the car dealer, before you decide on your car. Some new cars have a hefty new car warranty service.
The cost of the new car warranty service is what causes financial problems for many inexperienced persons. Find out what the new car service cost before you purchase a new car. It is required to keep your first-year warranty in effect.
RECALLS OR LEMONS
There are those who think if they buy a new car, they will have the perfect car with no problems. That is not true. Pay attention to the recalls on new or near new cars. You can research the recall schedule for the car you are interested in. One person, I talk to about car recalls told me he was forced to park his near new car because he kept getting recall notices.
He got a total of 37 recalls by the time I talked to him and simply did not have the time to take the car to the dealer at that time. If these recall issues are not resolved, it can cost thousands of dollars in repairs down the line if the car is passed on to someone who does not check for the recalls. It may also make the car unsafe to drive if the recalls are not addressed.
LOW MAINTENANCE VERSUS HIGH MAINTENANCE CARS
Low maintenance cars have two advantages. One, they don’t take a lot of your time. Two, they don’t take a lot of your money. Constant unexpected major car repairs are a large part of budget busting.
You can look up car maintenance history on cars at all the car analysis sites. New cars with high maintenance schedule should be avoided, this is another hidden cost. During the car note period and after the warranty period, a high car maintenance bill could cause you to park it until you have maintenance money.
A low maintenance car is a more affordable option. Some cars have a high repair rate as near new cars and some have low repair rates as used cars. If the potential owner maintains a regular maintenance schedule, with regular oil changes and tune-ups, and when something goes wrong it will be taken care of early.
Long Term Performance
Some cars last for several years without major problems some only last a few years. Check out the long-term performance of your car to see if you have a high maintenance car that requires a lot of repairs as a used car.
New Car Research
There are websites all over the internet where you can research new cars for cost, depreciation, new car repairs, warranty cost and just about anything else you need to know. The following come to mind – Edmunds, consumer reports, Carfax, Kelly blue book (kbb), and many more. The important thing is that you do your research before you buy the car.
Lois Center-Shabazz | Course Delta Agency
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