The average new car purchase costs about 15% more than the previous year. Prices are surging because of chip shortages and low inventory. Meanwhile, demand crept back up to pre-COVID levels.
If you need to get a new car, expect to pay more for a new car than you have in the past. It makes it more important to get the car purchase right the first time.
At these prices, a new car is on par with buying a house. We cover what you need to know to make sure you get the right car for your needs and your budget.
Read on to learn what to consider before you buy a new car.
1. New vs. Lease vs. Used
The first decision you have to make is whether you buy a new, used, or leased car. Consider all of your options before you make a purchase.
A used car used to have a lot of cost advantages. Those advantages disappeared over the last year.
Used car prices increased by 32% between August 2020 and August 2021. They’re up 42% since the beginning of the pandemic.
A lease lets you get more cars for less money, but you have to read the lease agreement before you buy. You don’t own the car outright, though you can return the car and get a newer model at the end of the lease.
2. Financing Options
Financing a car is necessary for most people. Not many have $30,000 to $40,000 sitting around the house. Check your credit score to make sure you’re eligible for a car loan.
If your credit score is good, then you’ll be able to secure a low-interest rate loan like a Plenti Car Loan. A poor credit score limits your options to get approved.
3. Your Budget
There are dangers of overspending on your car. You could end up in a situation where you can’t make your monthly payments and you lose the car.
Add up the costs to own the car and make sure you have a realistic view of what you can really afford.
4. Practical Needs
What will you use the car for? Your driving needs may have changed because of the pandemic.
You might only need a car for basic errands as opposed to commuting to work. You might not need a huge car anymore and can get an economic model.
Consider the features that you want and need in a car. If you spend a lot of time in the car, a good sound system might be important to you.
On-board cameras, remote start, Bluetooth connectivity, and adaptive cruise control are some of the features to look for.
5. Total Cost to Own
The total cost of owning a car is about $10,000 a year. Loan payments, gas, car insurance, and maintenance make up the majority of ownership costs.
Take a look at different models. Get insurance quotes for them.
Check out how much fuel they use. Calculate how much fuel you’ll need to drive according to your current driving habits.
6. Vehicle History
As you narrow down your options, you’ll want to examine the vehicle history. This is more important for used cars than new cars.
Check to see if the car was involved in any accidents and get a full maintenance history from the seller.
New cars have limited histories, but you can get a sense of the quality of the model thanks to research. You’ll want to look at a model’s reputation by reading reviews online.
7. Dealer Incentives
Dealers used to offer rebates and incentives to encourage more people to buy cars. They don’t offer many incentives at this time due to low inventory.
However, you can still find some incentive programs before you purchase. Ask dealers what kind of incentives are available.
8. Research Makes and Models
Take your time and research different makes and models. If you go into a purchase with a particular car in mind, you might find that it’s not the best car for you later on.
Some models hold their value much better than others. This is something to consider as you look for a new car. You’re going to trade it in or sell it in several years.
It’s very possible that your next new car costs more than $40,000. The trade-in value of your car will help you offset the cost of your next car.
Some cars that hold up well over time are Jeep Wrangler, Toyota Camry, and Mazda Miata.
9. Driving Experience
Take several different cars out for a test drive. Think about your needs and how you’ll drive the car. If you’re doing a lot of highway driving, the pickup might be important to you as you drive on onramps to match the speed of highway traffic.
Check the cabin noise at high speeds. A noisy cabin can be a distraction on the highway. Notice the handling, the braking system, and accessibility of lights and other features.
Compare your driving experiences to your wants and needs. That helps you narrow down your final decision.
Important Considerations of a Car Purchase
A car purchase is one of the major purchases you’ll make in your life. Don’t take it lightly because it could hurt your finances and you could end up in a car that you don’t like.
You just learned the top things to consider before you make a car purchase. Be sure to weigh your needs, budget, and the total cost of ownership. Research different makes and models and don’t get attached to a particular model.
Check out the Lifestyle section of this site for more great tips.