The car is a depreciable asset, so why to buy a car on loan when you can buy one in full cash. Buying a car on loan means paying more price for a depreciable asset. Having debt is not a bad thing, but it is not profitable to have it as a depreciable asset. You can surely build a strong credit history by paying all your debts on time. Ideally, your debt to equity ratio should be 2:1, but at an individual level, you should keep your debt to income ratio lower. Buying a car in full cash will help you save a lot of money, and you can go for other debts like a home loan which is an investment & will appreciate value. Westside KIA presents the things you should consider while purchasing a car with cash.
Do your research
The first step is to find out what kind of vehicle you are looking for. The year, make, model and color of the car. Your main purpose to purchase this car is the daily commute, or you are a traveler and looking for something that could take you on long adventures. Are you looking for a stylish vehicle or you are ok with compromising with the looks. A little cosmetic error is ok for you.
Once you are clear about some of these fundamental questions you can go ahead with finding out the cost of your vehicle. While calculating the value of the car you need to calculate license plates, insurance, tags and registration cost. Keep some money aside to pay a certified mechanic to check your second-hand vehicle. Instead of buying a merc buy a ford because a Merc has a high maintenance cost as compared to Ford. If you have a low budget, you can go for a second-hand car.
How to save money?
Now that you have decided the kind of vehicle you want you should start planning your finances. Save money. Before you start saving go through the following things.
- The appropriate time for you to buy the car, i.e. when do you need the car. How will you manage your commute until the time you save enough money.
- Where will you sell your current vehicle in case you own a car currently?
- Know your current vehicles market value.
- In case you are buying a newer model, what will the insurance and registration charges?
Now you can start saving as per the estimated cost. Anyone will be able to save within six to nine months for a second-hand car. Using public transportation or using your bike will help you save money. If you are ready to do this, you can sell your old car and jump-start your savings.
Save the first $2000 and beyond
It is the most difficult to save the first $2000. You need to get into the savings flow. Always cab sharing, carpooling options to save money. Cut on unnecessary expenses like your daily coffee at star bucks or eating food outside daily. At least cut down to only one meal out. You can consider a side job to collect those extra dollars.
The intrinsic risks
There are a few risks while buying a second-hand car. You are buying a second-hand car; your current seller might hide a few minor technical issues from you to make the sale. Make sure you do your research thoroughly and your salesman allows you to take the car to your mechanic for detailed inspection before completing the sale. Ask for all the legal paperwork of the car. Check maintenance reports if there are anybody works or improvements done in the past. Check past accident records of the car. Check the insurance claim reports.
These are a few tips that I have for any car buyer. Own an economical car by following these tips.
Westside Kia Dealership in Houston 