Many experts believe that there is no worse investment than buying a new car. It can be seen as a huge waste of money and a piece of metal that will depreciate in value the second you drive it off the forecourt. But you may have decided that buying new instead of second hand is best for you and your family. So here are some things to consider when deciding if you can afford to buy a new car.
Maybe you dread the thought of constant repairs or want a car that is in line with today’s emissions and safety technology. Or maybe you just love that new car smell. There really are many different possibilities. But the big question to ask yourself is- can you really afford it?
Put Down a Downpayment
If you don’t have the funds to buy your chosen car outright, you’ll need to put down a little bit of cash to secure the deal. Companies such as Really Easy Car Credit could help you get the amount that you need. The ideal amount to put down is approximately 20%. Sit down and do the figures and see if you can afford it.
Take a four-year loan
The most common length of loan for a car or other auto vehicle is approximately six years. However this could prove a bit too long. Consider taking a loan of around four years. It a good way to minimise the interest and ensure you’re not paying more than you have to. It also a good way to determine what you can afford. If you can’t meet the requirements for a loan payments of four years, it’s more than likely that you can’t afford the car in the long term.
Only use 10 percent of your income
One final point is to ensure that you’re only using 10 percent at most of your monthly income towards your car payments. Any more than that and you can see yourself drifting into the red financially. Account for everything, including fuel. Car insurance, MOT fees and even parking tickets in this amount.
Stay within these boundaries and you’re looking at being able to realistically afford the car that you want.
Bonus tip – Consider trading-in your car for another used vehicle
Maybe after reading this, you’ve decided that buying new isn’t for you, at least not right now. In that case, maybe you should think about buying “newer”. There are basically two ways you can go about this.
One option is to sell your current vehicle and then use the funds to buy a replacement. In theory, this could get you the best deal. In practice, it can turn out to be a whole lot of pain for little to no gain.
In short, the internet has made it really easy for buyers to research sales prices for just about any type of vehicle. This means that they’ll almost certainly be looking for a meaningful discount on the “dealer price”. To be fair, this will reflect the fact that they won’t get the same level of protection on the sale. They’ll also, presumably, be paying the full price up-front.
The other option is just to trade in your existing vehicle for a newer one at a reputable dealer. For example, you can just browse the used Vauxhall cars for sale from Pentagon and pick your favorite. Then contact the dealer and ask what they can offer as a trade-in deal.
You’ll probably find that the discount the dealer will offer you will compare very favorably to a realistic private sale price. What’s more, you can generally also get finance on decent terms.