Buying a Car


Buying a car is a major financial investment as well as an important personal decision. The first thing you need to decide is how much you can afford to spend; this amount shouldn't be more than 20% of your net income. Second, you will need to decide what kind of car will best suit your needs. Are you single or a family of five? Will you use it to commute every day or just drive it on the weekends? Take the time to look at all your options and decide what is right for you.


NEW OR USED

Maybe your budget will only allow you to buy a second-hand vehicle from a dealer or individual. Be cautious in either case. Look at some of the many available consumer awareness books. Do your homework. Shop around and take your time. Most of us aren't mechaniclaly inclined, so once you've test-driven the vehicle, take it to a licensed mechanic for a final inspection.

That new car smell can be intoxicating and it can be comforting to know that you won't have any large mechanic bills for a while, but most of us don't have enough spare money lying around to buy a new car with cash. So, the next decision is whether to lease or finance.

The advantage of leasing is that you will be driving a new car while making relatively low monthly payments. The disadvantage is that you may never own that car and may find the many restrictions and penalties that come with a lease to be unacceptable for your driving style. Read the lease agreement carefully before you commit to anything.

Depending on the size of your down payment, financing usually means a higher monthly payment that you simply may not be able to afford. However, when you finance a car, you have the pleasure of knowing that it will belong to you one day.

Whichever method you choose, think about all the costs involved in driving and maintaining a vehicle. Make sure you choose something that meets as many of your needs as possible while still being something you can afford and enjoy.

LEASE OR FINANCE

 

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