In the US, a vehicle is a necessity. The country is so vast, so diverse, and so populated that it is important to be able to get from A to Z whenever you want. Sometimes, carpooling and public transportation simply won’t cut it, especially if you don’t live in a big city. When you’re in search of a new vehicle, or a used vehicle, you will want to have all your proverbial ducks lined up in a row.
Important Tips for Keeping Your Vehicle Costs Down
The following is a guest post from my friend Ryfka and her recent car-buying experience. Enjoy!
This is the subject of conversation among many financial analysts, financial advisors, and buyers. The answer to the question varies from one person to the next. If you are in the market for a new car, there are many benefits available to you, including the following:
- A brand-new vehicle comes with 0 miles, a manufacturer’s warranty, a service plan, and a brand-new vehicle scent.
- A brand-new vehicle has not been in an accident, and is yours to break in, and enjoy accordingly.
- And, that brand-new vehicle is typically purchased from a reputable car dealership with multiple payment options such as a lease (allows for tax deductions on depreciation every year), outright purchase option, or a financing plan.
On the flip side, a new car is expensive. You will need to have insurance to cover the value of the vehicle in the event of an accident, theft or fire. It is foolhardy to purchase a new vehicle without all the requisite insurance. And, insurance costs money – bear that in mind when purchasing a new car.
Besides for the purchase price which routinely runs $30,000+ for a new vehicle in the United States, the cost of financing a new vehicle, or a lease is also high. You will need to have much more money on hand to be able to satisfy the requirements of a new vehicle purchase – less so for lease. Be advised that leases require some sum of money down.
Going with a certified car?
Certified cars and used cars slot into a similar category. Certified cars typically have the manufacturer’s stamp of approval on them. They are certified good in terms of the condition of the vehicle, low mileage, an existing warranty plan, service plan and the like. Certified vehicles are the second-best thing to purchasing a new vehicle, and they typically come at a reduced price.
Be advised though that certified vehicles are not cheap. They do need to be insured against theft, damage, fire and other eventualities. It is highly advised that you check out your auto insurance options when purchasing a new vehicle, a certified vehicle, or a used vehicle. If possible, try to bring a mechanic with you, or at least somebody who is knowledgeable about vehicles when you’re purchasing a second-hand car. They will provide you with invaluable feedback about the condition of the vehicle – both inside and outside.
Don’t make the mistakes I made…
I recently went shopping for a second-hand vehicle, and I found a convertible that I really liked. It was a Mercedes-Benz SLK 350, that had a great looking black glossy body, polished tires and just 37,000 miles on the clock. This 2005 model was a real steal at $16,000.
I managed to negotiate with the dealer to get the price down to $15,000, all inclusive. However, I was unable to spot all the problems with the vehicle. A day later, I noticed the bodywork was in disrepair. The front bumper of the Mercedes Benz SLK 350 was cracked in multiple places, and I was required to contract the services of a professional for $500 to repair the damage.
Maintenance of vehicles is a crucial factor to bear in mind. The cost of purchasing a vehicle is a major expense, but the service charges, daily maintenance (oil, gasoline used, tires etc) must also be considered. And insurance is paramount.
You will be required to put money aside for the annual costs of maintaining the vehicle in good working order. You may opt for the minimum insurance requirements as determined by state law, but comprehensive coverage is often a far better option available to you. Check insurance aggregator services to source the best possible insurance rates and coverage for your needs.
Remember: high-end vehicles are typically associated with higher costs over their lifetime. Reliable mainstream vehicles such as Nissan, Toyota, Fiat, and the like are easier to maintain and generally more reliable than the fancy cars.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.