Americans have learned a hard valuable lesson about basic economics in recent years, which still affects employment and personal budgets. With all the foreclosures and property repossessions, the fundamentals for living within your means has regained priority in the lives of many American consumers.
Understanding need over want is a basic principle behind the philosophy and, unfortunately, a car is usually in the need category, unless your city offers reliable public transportation and bike-friendly streets. If you’re in the market for a vehicle, there are many particulars to consider before approaching a dealer.
Look at a car as an investment, but it should not place your savings in dire straits. It’s like purchasing a home, but it has less return on the investment. The average new car loses about 40 percent of its value in the first three years. If you don’t have the money on hand, which most don’t, then you’ll have to get approved for a loan. With the difference in price between new and used cars in the thousands, you want to base your choice on affordability and safety rather than style. You will be tying yourself down to a five year loan, and sometimes more, which will bleed you dry and divert your income in ways you can’t afford.
Cars have often been a symbol of status in America, and the bigger and flashier the car, the greater the status. However, keeping this attitude about your car will cost you. An inability to make monthly payments on time will negatively affect your credit score, which could affect future financial decisions. They often find themselves in need of car title loans or contacting creditors to make ends meet. Despite the risk, buying a new car can have its advantages.
There is an old saying that when you buy used cars you’re just buying someone else’s problem. Some of the newer models on the market offer amazing fuel efficiency and safety standards. Some older cars are bad investments with a history of significant wear and tear. However, in recent years, the Internet has proven itself as an excellent resource for checking a car’s history and kept consumers from making uniformed purchasing decisions. If you are considering used cars, check out websites, such as CarFax, to view a vehicle’s history.
With used cars, you will obviously have a lower purchase price, but you’ll also have a lower depreciation in value, no sales tax, decreased financing costs, lower registration and licensing fees, which are traditionally tied into the value of the vehicle, and lower insurance premiums. The best perk of buying used cars are the shorter period loans and lower monthly payments. All these benefits add up to translate into real world savings.
Before buying, consider whether you really need a new/used car at all. If you can, stick with the car you currently own for another year or two, because making it through a tough economy sometimes means making due with what you have. If you need to buy, then be a smart shopper. Don’t pick a car because you think it is cute. Many people have to take on an extra job or increase their hours at work just to pay for the added expense, which is not a wise decision. If you can buy a new car then you’re lucky, but remember when bills are due to still live within your means to ensure continued financial stability.