Shopping for a new car, when done correctly, is a time-consuming process.

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Buying your new car: What you need to know
3 years ago
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Shopping for a new car, when done correctly, is a time-consuming process. One of the decisions you will need to make before you bring your new vehicle home is whether you should buy your new car or lease it. Buying a new car is very appealing for those car shoppers who desire to keep their car for more than a few years and eventually pay it off. Before purchasing a new car, however, both the advantages and disadvantages should be considered.

Advantages of Buying:

For many people, having something to show for years of monthly payments is important. If this is something that matters to you, buying might be the better option. Buying your new car will enable you to eventually pay off your debt and own your vehicle outright.

Buying your vehicle allows you the freedom to customize it in any way you wish, including changing the paint color, tinting the windows, and adding accessories and electronic equipment. Leasing does not typically allow any modifications to be made to the car. Buying your new car also enables you to drive it as much as desired or required, without worrying about exceeding your allowed mileage limits or being hit with penalties for wear and tear.

One of the greatest advantages of buying is that it helps you build equity, and enables you to sell your car for any reason in the future. Although payments are typically higher when financing the purchase of a car, those payments go toward paying off the car instead of simply toward renting, or using, the vehicle.

Disadvantages of Buying:

Buying a new car is a huge financial investment that requires a serious commitment. Financing options may be limited for those with no credit, and interest rates may be higher for those who have poor credit. Depending on the type of car you choose to buy, your credit history, and your location, you may end up paying much more for your vehicle than it is worth.

Purchasing a vehicle typically results in higher monthly payments, because it requires you to pay off the entire cost of the vehicle. How long you expect to keep ownership of the car, or how many miles you expect to drive it, are irrelevant. You will usually be required to make a down payment, pay the entire sum of sales tax upfront, and agree to an interest rate determined by your lender during the financing negotiations.

Because new cars begin to depreciate immediately, your car may not be worth what you owe on it as soon as you drive it off the lot. If you do not intend to keep your car until it is paid off, purchasing your new vehicle might not make financial sense for you.

Is Buying Right For You?

Buying provides car owners the freedom and flexibility of using the vehicle as often as needed, and offers the ability to sell it or exchange it for another car at any time. For those with financial limitations or a history of credit problems, buying might not be possible or may result in extremely high interest rates. Additionally, buying a new car is a long-term commitment. If you enjoy changing cars frequently, purchasing a new vehicle will likely cost you considerably when it comes time to upgrade to the latest available model.

Before agreeing to purchase your new vehicle, you should consider your financing options, your monthly budget, and spend time shopping around for the best deal possible. Buying a new car requires greater costs upfront and will likely result in greater monthly payments than leasing. However, when the financing of your auto loan has been completed, you will own your vehicle and will be payment-free.
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