Buying a new car is one of the most significant financial decisions we make, second only to buying a home. The New Year brings with it a number of tempting offers by manufacturers and dealers alike. It is important to keep your eyes peeled for the fine print and not get swayed by an offer that seems too good to be true. Even things like insuring your car can be something that can leave you stumped because of the sheer amount of choices available.
This is the time of the year is when most of us desirous of buying a new car are battling out the choices at hand. It is important to know that there may be factors to the purchase that can end up making it more costly than it is supposed to be.
Here are some things you need to focus on when buying a car this year:
Be Clear About Your Financial Limitations
The costlier the car, the better the discounts on hand, but do not let that fool you. It can turn out to be an expensive affair if you allow the freebies on offer to lead you astray. The most important thing to keep in mind when buying a car is the 60% thumb rule. According to this you should only be buying a car that is about 60% of your yearly take-home salary. Another rule you can follow, one that has been around for as long as EMIs have existed, is that the EMI should not exceed 15% of your post-tax monthly income. Another way to look at it is that your EMI budget should not exceed 40% of your investible surplus after expenses and mortgage payments.
Weigh the Offers
The beginning of the New Year is usually when new car models are launched; it is also the time when different offers are up for the taking in the automotive market. Most manufacturers tend to inflate the cost of the accessories to make it seem like there is a discount on offer. If you really want to go for a discount, make sure that you go for a cash discount instead of an accessories discount. Exchange offers too may be a little too good to be true. It would do you well to ensure that you are not being saddled with an overall loss on your deal. Make sure you do your research well before you hit the market.
Petrol Vs Diesel
Settle this debate before you set out to purchase the car of your choice. One needs to understand that petrol might be the costliest fuel out there, but petrol cars are still the cheapest. Diesel cars, despite diesel being less expensive than petrol, are usually more expensive than petrol cars. One needs to be clear about their requirements before going for a car. Diesel cars are okay if you need to travel long distances every day, for instance if you are driving more than 80 kilometres every day. But you would do well to know that diesel cars require far higher maintenance than other cars.
Buying a new car can be costlier than anticipated if one does not make a calculated decision. If one keeps in mind the above-mentioned points, one can steer clear of over-investing in their car of choice this New Year.
For the best financial guidance, visit us at Volkswagen Financial Services.