Buying a car can be one of the entries in your Christmas list this holiday season. This is a time where consumers have a little more elbow room with spending and the season is so inviting when it comes to spending money. Several brands, establishments and even credit lenders are also making it easy for people to make purchases.
All these becomes so tempting during the holiday season that you would think buying a new car is a great idea. Although USAA.com shares that fall and winter are some of the best months to purchase a car because of potentially big discounts, the holidays has an appeal all on its own. People seem to find their way to the dealer talking about their next purchase.
The can be for their own personal use as a first time purchase or to replace an aging car. It can even be for business related needs which would help consumers reach more customers. There are some who buys vehicles as gifts for their loved ones. Whatever the reason, this is a financial decision that you should not take lightly because it can have a big effect on your funds.
There are a number of tips for getting a car loan and you need to look into them because they can help you approach your car buying task better. However, the thought of getting new set of wheels this holiday season is a little different. The atmosphere during this time of the year is geared towards buying and giving that you would think getting a car is not that big of a deal.
Buying A Car This Holiday Season
Even before you head out to the dealership to look at cars, it is a best to have an idea on the sales tricks some car salesmen use to lure you into a purchase. It is also important to ask yourself these following questions which would better guide you if you really need a car or not.
- Do you really need it? This should be a question on top of your list and one that you have to answer with sincerity. It is tempting to buy a new car this holiday with all the extra money you have and the great terms being offered by dealerships. However, you need to see past your wants and try to understand if it is really something you need. Are you buying simply because you can or you want to compete with your neighbor or even simply wanting to impress your relatives who are coming over? Or do you need it for your business or even to replace a car that has been breaking down on you for years?
- How does your budget look like? One thing you need to look into as well is your budget. The reason a lot of consumers fall into the trap of holiday debt is that fact that the forget to punch in the numbers from their budget. You might have some extra cash this month but this does not mean you can take out big ticket items where repayment will extend to several months. It is noteworthy to remember that according to Bankrate.com, $479 is the average monthly payment on a new car. You might have that amount now but how about next month and the month after that?
- What do you need to give up for it? You might not realize it now but after the holidays are over, you will still to pay for the car. This means that you have to make way for the additional expense in your budget as the months roll in. You would need to look at what you have to give up just to make the payments. This can be your weekly entertainment fund or being able to pay down your student loan faster. If your income and expense does not change and you add car payments into the mix, something has to give and the easiest thing to do is bum off items in your priority list. It might even be saving up for your reserve funds or worse, passing over the chance to put the maximum amount in your 401(k).
- Does it fit into your long-term goals? More than just your current budget, you need to look into your long-term goals to see if the car purchase and the effects it has on your finances fit into your plans. If you want to pay off your mortgage in half the time say 15 years, you need to either double up on your 30-year loan payment or put extra payments into capital. However, adding a car expense in your budget could prevent you from doing that and make you lose track of that goal. You need to check how the car payments would affect your long term plans before getting a new car.
If you are bent on getting a new car
Once you reach a decision that you will buy a new car this holiday season, here are a few things to guide you with your purchase.
- Brand new or used. There are a lot of ways to save money and when you are buying a car, this can mean considering a second-hand unit. They are less expensive than brand new ones and your monthly payments can be a lot smaller. However, a brand new one can lessen your headache in terms of maintenance. The bottomline is to understand what is more important for you based on the benefits of each.
- Factor in miscellaneous costs. Gas, insurance, maintenance and upkeep are just some of the additional expense you need to factor in as you get a new car. It is important that you get to factor these in your budget and not just the car payments. These will definitely have an adverse effect in your budget if left unchecked.
- What will you do with your existing car. If this is your first time buying a car then you do not have to worry about this tip but for those who already has one, this is a common issue. Some consumers trade-in their old cars so they can use get money off of it. This is a great way to lower down the initial cost of buying a brand new one. There are some who simply pass them on to other family members and even relatives but cashing in on them seems a pretty decent way to manage your existing car. Although it is really hard to let go of one and even CNBC.com shares that car owners hold on to their cars for about 7 years compare to only about 4 years in the past.
- How will you maximize your car. If your are using your car for a specific purpose such as for business or for the whole family then maximizing the car might not be much of a problem. However, if it is just for personal use and you rarely use it then it is just depreciating away in your garage. It might be ideal to find out how you can maximize your car on days that you have no use for it. This can help you cover your car payments and even earn a little extra on the side.
Buying a car is a big financial decision and the holidays is really making it a lot harder for consumers to make sound financial decisions. You need to step back and ask yourself if buying a car is something your budget can support and if it is in line with your long term goals.