The truth is, we all have that dream car that we want. We all have that top luxury car that we dream of, some of us even have posters of them or we always share them on social media for our friends to check them out. However, because life is what it is, we always find that the dream car is not as important as paying bills, raising kids, and securing our financial future. That is why we end up having to make a compromise between your dream car and the most practical car.
The purchase of a car is a major undertaking and needs serious considerations before committing oneself to buying a car. Most people make the mistake of just thinking that the cost of the car, are the car payments only and without looking into all the factors, commit to buying a car that they eventually realize they cannot maintain, or the total costs are just too overwhelming on the family finances.
There is a need to consider all the factors before making that all important decision to buy the new car. These factors are:-
1. FINANCING COSTS
This is the first and obvious one. You need to decided if want to buy your car cash, or you want ot finance it by way of a car loan. Its always best when you have the cash to buy a car because that means you avoid the costs to finance a loan or interest. When you decide to finance your car, its always important to gauge whether the monthly payments are within your range or can fit properly into your budget without straining your finances.
2. INSURANCE COSTS
The advantage of buying a car cash is that you have the freedom to decide what insurance coverage you want to have on your car. It may range from very basic to comprehensive coverage. My take is, if you can afford your car cash, the best is for you to have good coverage on it, to safeguard against life’s uncertain moments.
For those who finance their car, usually the financial institution will give you the insurance coverage that they need on their car until the very day that you make the final payment. Most, if not all will insist on full coverage which is usually a high cost. You need to consider if your monthly budget can handle a) financing costs and b) insurance costs. If so, well and good.
3. FUEL COSTS / GAS MILEAGE
Whatever car you want to buy, find out, either from the dealer, or the internet, what tye of engine it is and what is the fuel consumption of the car you are about to buy. The larger the engine the more fuel it consumes which translates to you paying more at the fuel pump as compared to a car with a smaller engine. This is important factor that adds to the costs of your car but most peopele do not consider this when making the decision to buy the car. That is why you find so many frustrated by the car, as they seem to be at the fuel pump alot more frequently than they anticipated.
4. MAINTENANCE COSTS
Newer cars usually need the normal oil change and a few maintenance requirements every now and then. However, they cost a lot more to buy than older cars. Older cars on the other hand while cheaper at first, do tend to require a lot more maintenance especially if your are unlucky enough to get a car whose previous owner did not do the required maintenance. Before making that car purchase, its imperative to have a mechanic do a diagnostics check on the car. One would rather spend a little amount of money to pay the mechanic, than having to pay a larger amount of money on spare parts and repair somewhere down the road.
All these 4 factors should be taken into consideration before you finally decide to buy your dream car. They are all equally important because they are costs that you will have to incur every month, and should factor into your monthly budget.
Check out this video that expounds on these 4 factors.