Should You Buy a New Car This Year?
Should you buy a new car for yourself this year? Here are some must details you need to know. Prepare to get sticker shock when you walk into your neighborhood dealership.
The prices of brand-new cars hit all-time highs in 2021. Consumer Reports stated that the average cost of a new car was more than $47,000. This rise in car prices can be blamed on the pandemic, which led to labor shortages and supply chain disruptions in the auto industry. Since new cars were difficult to manufacture and import, prices of available cars increased.
If this information doesn’t stop you from wanting a car, you should read these tips on how to prepare your finances for this purchase — both before and after you buy it.
The used car market also saw sky-high price increases in 2021. Customers that were looking to save some money on previously owned vehicles found themselves in intense bidding wars. Luckily, the pattern of inflated prices looks like it’s finally slowing down. Research shows that used car prices have dropped and may continue to trend downward.
A used vehicle’s price might fare better with your budget.
Do you have a vehicle you’re trying to replace? You could use the profits from that sale to help you purchase a newer vehicle. As previously mentioned, the market for used vehicles is hot — you could jump onto that and get money in your pocket in a flash.
If the vehicle is too rundown to sell, you can always sell it for parts. You can do this at local scrapyards, auto parts stores or online marketplaces. You may not get the same amount as you would for a fully functioning vehicle, but you’ll at least get some funding for your next purchase.
Analyze Your Budget
Analyze your budget to see whether you can manage car payments for the months ahead. You may need to shrink some of your variable expenses to comfortably afford these payments without disrupting your ability to cover other essentials like rent and groceries.
Getting a car will automatically eliminate some of your variable expenses, like Rideshare payments or car rental fees. So, should you buy a new car if these are payments you could live without?
Remember, you will have to consider more than monthly car payments in your budget. These are some crucial car-related expenses that you need to add:
- Registration fees
Make an Emergency Fund
You should put together an emergency fund so that you have enough savings to cover small, urgent expenses — including car repairs. This is crucial if you decide to go without roadside assistance coverage through your auto insurance.
If you don’t have enough emergency savings on hand and you can’t afford an urgent repair, you can try to borrow money online as a solution. If you meet all of the qualifications of an online loan, you can apply and wait to see whether you get approved. With an approved loan, you can use borrowed funds to pay for urgent repairs in a short amount of time. Then you can follow a repayment plan.
You will be more likely to deal with sudden repairs when you purchase a used vehicle since they’ve accumulated more wear and tear than a brand-new vehicle straight off the lot. Plus, with a new vehicle, many repairs will be covered under the factory warranty. This service will not be available to you with used vehicles.
Should You Buy a New Car for Yourself?
Getting a new car is no small decision. So, follow these tips and prepare your finances for this big purchase.