Planning To buy A Car?
Buying a car is an exercise – budgeting, researching, financing, etc. Buying a car is still considered to be a milestone in India. It is a kind of achievement. And it really is, because, it’s a very important decision that one can make in life. It is still associated with social status more than convenience in India. But once you finally decide that you are going for it, you are in a new kind of dilemma. Which car? What’s the mileage? What are the EMIs?
While I will not attempt to make this a guide to purchasing the right car, I will however, try and give you some important considerations with regard to buying a car and personal finance. These considerations will help you to make the purchase with full confidence, apart from the question, which car to buy.
What will I do with the car?
This is an important question that you must ask yourself first, before any other question. Are you buying it to commute from point A to point B. Or are you going to buy it for extensive travelling? There is no point considering the mileage when travelling will be less. Buying a diesel version is also wise when you will be doing extensive travelling, because diesel is cheaper than petrol. So your running costs will be lower. How many of you will travel at a time? Bigger family, means big car and vice-versa.
Do I need a finance?
A car is a depreciating asset,, which means, the value of your shiny new car will go down over time. In the first two/three years the value depreciates the most. In fact the moment you take the delivery, the value will depreciate by 10%. In the first year, the value will depreciate by as much as 40%. Buying your car on finance only increases your purchasing cost because of interest. You may have to pay 9 to 14% interest per year over the cost of the car. So if you plan to sell it after few years you will loose more than if you buy it without finance. I will suggest you to go for finance for a maximum of 50% of the value of your car, if you need it at all. The best would be to buy it with your own money, rather than finance it. The next best option is to buy a second hand car. Financing should be your last option.
New or second-hand?
While buying a new car is always a welcome decision, but nowadays, buying second-hand cars can be a done with full confidence. Buy the second-hand car from a dealer simply because you will get a warranty for it. The refurbished car is almost like new, but because it has depreciated in value, buying it makes a lot of sense to your finances. Gone are the days when you used to worry about a second-hand car’s reliability. But I suggest not to buy a car more than three years old.
Research Before You Buy
I have given the three must-ask considerations above, and after you have made a decision on those, you must research for the right brand and model. Remember, nowadays consumer is the king. So research by visiting different automobile sites, ask your friends/colleagues/relatives about their experience, test-drive at least three different models before you zero in on that dream machine. You should research at least for 15 days before buying. More you research, you will be able to buy a perfect car for yourself.
As I have written in the beginning I have not gone into the details about the car buying process. This is to guide you on the most important considerations while buying a car. Follow the above four simple steps, and you will never regret your purchase.
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