Your car is around 10 years old. It’s still good albeit with some recent visits to the car mechanic. Still, you are seriously thinking about getting a new one because of all the travel you have to do to and from work. You also have to take the kids to school and run the usual errands for home. Admittedly, it’s not an easy decision to make. The pandemic hasn’t been great for your family financially speaking, so you’re not in the best position to buy a new vehicle. Still, the thought nags at you. Should you or should you not give this old car another chance?
There are three questions you have to ask before you dive into applying for a car loan. These questions will at least give you an idea of how much you can spare and how willing you are to sacrifice for a new car. Remember that a new car is a huge investment because you have to repay the loan. Sure, it’ll run almost seamlessly for the first five years of its life, but that is not a good enough reason to head straight to the dealership now.
Can You Sell the Old Car for a Good Price?
Are you going to keep your old car? The practical answer is no. If you are short on money, then keeping two cars (one old and one new) is not a smart move. You’ll end up paying for both their maintenance. The first thing you have to do is find out how much your old car is worth. Take it to a mechanic who specializes in the particular manufacturer, so a Toyota should be taken to a Toyota repair shop and so on. This way, the mechanic can give you an accurate estimate of how much it is valued given its make, model, manufacturer, and state.
You might even decide to improve its components with original Toyota parts to make the car more attractive to secondhand car buyers. Most of the time, buyers want a car that’s made with original parts. They’re willing to pay more for cars with stock parts and components. If you can
Do You Have the Money for It?
The most important question, of course, is can you afford to buy a new one? At the least, you need a 20% down payment for a new car or even a used car. Then, you have to ask yourself if you can pay the monthly amortization. Depending on the type and make of car that you will buy, you can pay as little as $300 or as much as $1,000 monthly on the new car. If you are not going to keep your old car, you can use the proceeds from its sale for the down payment. As for the monthly loan repayment, experts suggest that it should be about 20% of your monthly income, or less if possible.
But whether you can afford it or not is not the only factor to consider. You can squeeze it into your monthly expenses if you are willing to take on a side job or work overtime. You also have to look for a dealership that can provide good discounts and deals so you can maximize your money.
How Essential It Is for You and the Family?
Do you truly need a new car? Can’t the old car take you to and from places anymore? Sometimes, you need to ask this question because you might just be tempted to buy a new car since there are a lot of good models in the market. Luxury cars are for people who have the, well, luxury to buy them. They’re not for individuals and families who are trying to make ends meet. They’re not even for those who have only a bit of extra money to save in their emergency funds.
You need to be practical and ask the right questions when deciding if a new car is a good investment right now. Make sure you are buying for the right reason. It’s so easy to get tempted by what you see on social media, but the truth is that you will sleep better at night when you can afford your lifestyle.
When deciding whether you need a new car or not, you have two things to weigh: its affordability and your need for the new car. It all boils down to these two things because, at the end of the day, you have to squeeze the loan repayment into your monthly expenses. If your present car is still running and functioning very well, you might want to rethink buying a new car.