Whether it is for convenience or a status symbol, a lot of people want to have their own new car. Approaching a dealership to buy and sell cars can be easy, but the real problem may be with your finances.
Buying a new car is a serious investment that you have to plan for in advance. You will need to make sure that you will not have financial difficulties down the road. Several things should be considered to make sure that you are in the right place financially to afford a new car.
If you want to know if it is the right time to buy a car for you, consider the following points.
Cash Versus Credit
If you have saved up enough cash to buy a new car and you have nothing else to spend it on, then it might be good to buy a car at this point. People who buy a car using cash may be able to get good deals and significant discounts. At the very least, you will not have to pay the interest that comes with financing a new car.
While buying a car with credit is easier for your short-term budget, be sure you can handle the monthly payment down the road.
If you do not need to buy a car soon, you can wait and save up until you have enough cash before you buy it. However, if you do need to buy a car soon, then you must prepare a budget for it.
Personal Finance Considerations
If you need to buy a new car, you have to think about certain factors. The most important thing is whether your personal finances can handle paying for a new car.
Do you have an emergency fund?
For people who are familiar with different saving techniques, an emergency fund is usually the money you save before you buy other things. Often, it is equivalent to 3-6 months of your salary. The idea behind this is that you will have enough money if you suddenly lose your source of income. This money will help you survive until you find another source of income.
If you do not have an emergency fund yet, then it might not be the best time to buy a car. If there is an emergency such as a health concern or suddenly losing your income, you may have difficulty handling your finances. It will be hard to recover once you incurred a debt, so make sure that you have saved up money for emergencies before buy a new car.
Have you had a recent job promotion?
If you recently had a job promotion or you get a significant raise, you can use the extra money to buy a new car. When you are stable with your finances and have extra money to spend, buying a car can be a good priority, especially if it will help you with your daily activities.
What about your debt?
If you have student loans or a mortgage that you have recently paid off, you might be looking for a new investment to put your extra money into. People usually buy cars if they do not have any other pending debts so that it is easier for their budget.
If you still have debts you need to pay for, it is advisable to put off on buying a car for now and focus on clearing your debts.
Time Of The Year
If you are confident that your finances can handle buying a new car, you must make sure that you will get a good deal when purchasing a new vehicle. While there is a suggested retail price, car dealerships may sell their cars at discounted rates depending on the time of the year.
Look for Seasonal Deals
Certain cars are more desirable depending on what season it is. For example, a convertible is popular during summertime, so during winter, car companies usually have a discount for convertible cars. Meanwhile, four-wheel-drive vehicles are in demand during autumn and winter, so there is a chance that you will get a good deal around summer.
Take Advantage of Dealership Car Sales
Usually, around the end of June and December, dealers who want to hit their quarterly sales targets offer their cars at a discounted price.
For example, if a dealership in your local area did not meet their goal of selling a certain number of cars for the quarter, they are more likely to offer you a discounted deal to reach their quarterly sales target.
Consider National Interest Rates
The state of the economy is also a huge factor in whether or not you should buy a new car. There are certain times when it is best to buy cars based on the economy.
If buying a car through loans or credit, you have to check the national interest rates to make sure that you will not be paying too much interest on your auto loan. You should wait for a lower interest rate so it is easy on your budget in the long run.
In situations like a pandemic, which has frozen many countries’ economies and keeps people indoors, there is suddenly a low demand for cars. If you still have a stable job and extra money to buy a car, it may be the best time to get a great deal, as car prices are lower than usual.
But if you have enough to pay in cash, or you are sure that you will have a stable source of income later to pay your auto loan, then it may be a good idea to get dealership car sales from dealers who are selling their cars cheaply.
In the end, it is up to you to decide when to buy a new car. However, you have to prepare and expect a few changes in your finances if you buy a new car. You should have enough funds to keep you afloat even if something unexpected comes up.