Financial Spot: Cars Offer Both Freedom and Pitfalls

By Gowtham Pichaiyan and Ayush Shah
 
For many, driving is a rite of passage. A stage in life that marks freedom, responsibility, and power. With this new privilege, it is only natural to search for the opportunities to buy a car to call your own. However, the process of buying a car is notorious for its many steps, precautions, and dangers. This article will outline the basics of buying a car without breaking your bank.

One of the first steps in buying your automobile is picking a model based on your preference. Similar to most things in life, the more premium choices tend to cost more. When deciding the capacity of the options above, it is important to realize that these factors influence how much you will pay upfront and in the long run.

The criteria you choose for a car influence the following prices: cost (how much you pay upfront), maintenance (how much it costs to make repairs and keep the car running), and insurance (how much the insurance company sees fit to charge you based on the rating of the car).

For example, buying a brand new Lexus coup will ensure high performance, safety, reliability, and clean appearance, but the upfront cost, maintenance, and insurance are bound to be exorbitant. To prevent falling into a pit of endless debt, experts advise that car buyers should prioritize the criteria and choose an appropriate car within their budget.

Now you should know that cars are very bad investments, as the price depreciates the second the car is taken out of the lot. However, at the same time, this shouldn’t sink your boat in terms of car buying just yet if you properly plan out how you will go about buying.

First off, there are two main ways to get a car: buy or lease. Buying a car makes it your property while leasing is essentially borrowing the car for a fixed period of time. While leasing is the cheaper option, it comes with its drawbacks, as there is also a limit on the number of miles you can drive and also you cannot sell the car when the lease is up.

Once you decide on that, you must establish a budget based on your needs and ability to pay which will help to choose the model and brand preferences. When you have chosen all of these, it is time to move on to the financing part of the process.

Before you go to get a car, you should research prices online of the car you are viewing to make sure you find the best invoice price. Once you are fully prepared, it is time to buy the car. It is important to be able to know how to negotiate with the dealer as it is possible to get significant discounts with proper negotiating.

Once the price is settled, it is time to pay for the car. Most people will need to take a car loan out to pay for the car. On the chance that you have the ability to pay the full price on the spot, that is the best option as interest will not be an issue at all in the future. With a car loan, interest will be a key aspect of the loan repayment, usually spanning for a couple of years. The national average for US auto loan interest rates is 5.27% on 60-month loans. Taking out loans is a costly investment that could easily hinder your ability to purchase any other expensive items during the loan period, so it shouldn’t be taken out without extreme thought.

Along with the cost of the car itself, there comes a necessary maintenance cost for the future of the car. Luxury cars will typically end up costing more in maintenance than standard types of cars.  There is a fuel cost as well to be mindful of, as gas mileage could end up turning a cheap car into a gas-guzzler in the future, costing you thousands of dollars. Finally, insurance is a vital part of owning a car, as all cars must be insured to be allowed on the road. You must take the time to choose the correct plan to fit the basic legal requirements as well as any other precautions you would want to take with the expensive item you just purchased.

​It truly shows how complicated car buying can be and how important it is to do prior research and make a plan before you even walk into the dealership. Cars are a symbol of desired freedom for teenagers, but at the same time, they can be the chains keeping you bound to a dealership monetarily. 

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