Besides purchasing a house, a new car is probably the next biggest purchase you’ll make.
Unlike a new home that may appreciate in value and at least build equity, a car is a depreciating asset.
That means as soon as you drive it off the lot, it will start to lose value and it will never be worth more than the day you bought it (unless of course, it’s some sort of classic car).
For this reason, it’s important to make smart financial decisions when purchasing a car.
Too many people view cars as a status symbol rather than a means of getting from Point A to Point B.
While there are certain features that make some cars more desirable than others, it’s important not to lose sight of the fact that a vehicle’s main purpose is transportation. Everything else is just fluff.
For this reason alone, you should remain frugal when purchasing a car.
And oftentimes, consumers will overlook the many other expenses associated with buying a new car.
So how much will your new car really cost? Think about these additional expenses that will cost you more money than you thought.
Taxes and DMV fees
When asking for quotes, make sure to ask the dealer how much the taxes and fees will be, and always negotiate with “out the door” costs.
Too many dealerships will give you a low ballpark number to entice you to talk numbers, and it isn’t until you’re signing the paperwork that you realize the estimate is about 10% higher than what they had quoted you.
If you’re purchasing a new car, automatically add 10% to the sales price, which is the estimated taxes and DMV fees to take into account.
Insuring a new car vs your old beater car is going to cost more. Buying a coupe instead of a sedan? Yup, that will cost you more. Purchasing red instead of boring silver? That’ll cost you, too.
Car insurance companies use all sorts of complicated models to come up with your insurance premium. Make sure to contact them ahead of time to confirm that your premium will be manageable and not a shock when you finally open up that new bill.When buying a new car, you need to consider other costs besides the price tag on the car Click To Tweet
While today’s cars may be more gas efficient, if you’re upgrading to a bigger car, chances are you’ll still use more gas.
Make sure to check the gas efficiency on your vehicle and factor that into your monthly car payment in order to find out the true cost of your desired car. There are many gas calculators out there that will tell you how much your commute might cost you.
Like most people, you probably didn’t pay too much attention to that pesky “check engine” light on your old car since you knew it could be any number of things. What was the point?
But chances are you’ll want to take good care of your new car and will be keeping up with maintenance on a much more regular basis. Calculate the estimated annual maintenance charges for your car to make sure you know exactly what you’re getting yourself into.
Oftentimes, the price of the car is just the beginning of a long list of additional expenses you’ll be taking on. Make sure you’re prepared to take on such a big financial commitment that won’t give you any return on your money.
Did you make any pricing mistakes when buying a car? What do you think needs to be included in a car-buying budget?