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September 2014 - Things to consider before buying a car

Things to consider before buying a car

☳ by Adam Aspilla

A car is one of the biggest investments in your life especially if you buy a brand new or slightly used car where you need a car loan to finance your purchase.

The primary reason of buying a car is convenience.  It is convenient in going to work, it is convenient going to groceries, and to meet the transportation needs of your family and love ones.

Considering that a car is one the biggest investments, you need to be prudent in  buying a car. It is not enough that you are approved of a car-loan. You need to consider the following before signing on the dotted line to finalize your purchase:

First, check with your insurance company how much would be your monthly premium for insurance on a car you are planning to buy. This is important for if you are a new driver or has a bad driving record your premium would be sky-high. 

Second, you have to determine your budget for the car you are planning to buy. That is how much you can afford to pay for the monthly payment of the car loan, gasoline, maintenance, and premium for car insurance, without affecting your budget for your basic expenses: food, clothing and shelter.

After considering the two items above mentioned and you can comfortably afford to pay the cost of owning a car, you can go ahead buy the car you plan to buy. However, if your finances could not afford to maintain the monthly cost of owning a car, it would be prudent for you to differ your purchase until the time you can pretty much afford the monthly cost of owning a car.

Should you decide to purchase a car despite your inability to meet the monthly financial obligations itemized above, you will end up losing the car you purchased or just keep the car without using it, until it depreciates and become worthless.

First example: a couple who purchased a car without first checking the cost of insurance and had not pre-determined their budget, their car now is in the parking lot for more than a year because they could not afford to pay the car insurance premium. The worst part, they keep on paying the monthly payment of the car loan. Ultimately, said car would continue to depreciate until it becomes worthless.

Second example: A man, purchased a car, without doing his homework above mentioned, as a result, he could not get the car from the dealer for he could not secure a car insurance for the monthly premium is $900.00. The premium is so expensive because he has a bad driving record. His only option is to return the car to the bank that financed it and ultimately lose money for it will be sold to the highest bidder in a public auction.

 

 

Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.