If you’re in the market to buy a new car now may just be the perfect time. As the year winds down older models are on sale – some may even say liquidation – in order to make room for the 2016 models. When there are red tags on all car models everything may seem like a good deal. However that’s not always true.
The purchase price of the car is only one factor in the decision making process. There are other costs to be considered such as ongoing maintenance costs and the longevity of the car. Consider these six factors when buying a new car.
What’s the model year of the car?
Even though the 2016 models may already be out on the lot it doesn’t mean you need the latest model. There can be several new models from last year that have zero mileage. An older model – even a year – doesn’t mean a used car. Sometimes buying last year’s model can save thousands of dollars.
Does the car get good gas mileage?
If you use your car a lot the gas consumption can be a major factor when deciding between two models. Gas prices are low right now, but they may not always be so consider how much each mile will cost you at the pump.
How much is the overall price?
When you see advertisements for new cars they are most likely showing the cost of the base model. Once you add it upgrades and additional features the cost of the car can quickly add up. Just remember that many things can be negotiated when buying a car. Don’t be afraid to shop around; I saved $3000 by buying my Honda at a dealership in the suburbs versus a dealer location in the city.
Can you find the lowest financing interest rates?
If you don’t want to pay cash for your car – and I don’t think a lot of people do – you’ll want to find the best rate for your financing. Before signing the papers to buy a new car you’ll want to find the best financing option. Shop around and compare rates between your bank and the car dealership financing options.
How much are the monthly payments?
If you can negotiate the overall purchase price and find a low financing option you should find yourself with affordable monthly payments. At the end of the day after all the bells and whistles – a.k.a. floor mats and heated seats – buying a new car comes down to can you afford the monthly payments? Make sure you factor the monthly car payment, insurance, gas and parking costs into the overall budget for your new car.
Does it have a good resale value?
This is a very similar mentality to improving and upgrading your home. Ask yourself if your car is durable and will be able to be sold at a good price a few years down the line. Hondas are known to be very durable cars and therefore have a fair resale value. I know it may seem weird to think about the resale value of a car when you are buying it new, but it’s a factor to consider.
Kristina Tahnyak
Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.
Great article! I am hoping you would weigh in on one more issue related to buying a car. My fiance and I are having a debate. What gives you more negotiating power? Telling the salesman you intend on paying cash, or initially telling the salesman you’re financing, but when it comes time to pay, pay cash.
HI Madison, that’s a great idea. I had no idea that would make a difference but it seems you can always get a better deal when you pay with cash.