What you need to know before buying a new car
Investments and Expenses
Many drivers believe that buying a car is a big investment but in reality the purchase is more like a big expense. When you make an investment, you assume that you will make some kind of return. In contrast, the purchase of a car which is considered more of an asset continues to depreciate. You would certainly want to ensure that the worth of all your cars is less than half of your annual income. Something to think about, when considering your next car purchase?
Despite the drawback of a huge expense of purchasing a new car, or even the considerable expense of buying a used car, all drivers live with the reality that at some stage, they will have to be on the lookout for a new vehicle. None of us know the future and most of us rarely know exactly how our personal finances will be in 2017.
Some things to consider:
An automobile is a depreciating asset and not an investment. With depreciation, it loses value rapidly and drastically. Most often and generally speaking, a car used for personal transportation will not appreciate in value.
If you are financing payments on your new car, this “investment” has to be insured, repaired and maintained. Added to that are a host of other annual expenses, such as road tax, fuel etc. which in essence will make the loss on this investment even higher.
A reliable car or van is essential in order for most people to produce an income.
Many people see their cars as a social status symbol but again we have to ask ourselves if the luxury aspect of my vehicle worth the investment in our hard earned cash.
On the whole, consumer spending growth continues to show signs of growth especially since the first half of 2016. Consumer recovery seems to be in steady growth. It would seem that the domestic indicators are predicting continued momentum with regard to economic growth in Ireland and that means more car sales and new cars on the road.
Good news for consumers for sure despite the avalanche of opinions on Brexit. So what does this mean for drivers in general? In reality, it’s hard to tell, as there are so many factors which will only become apparent sometime in 2017, when the impact of employment and incomes are fully realised for the average consumer.
It’s very possible to purchase a nice car that makes a good impression without breaking the bank. If you feel that you need a luxury car, it’s advisable to look at your annual salary or income and then see what you can afford. Many thousands of people will be doing just that in the coming months.
Some questions you could ask before you buying your new car:
What will I use it for?
- How long do I expect to own it?
- Am I looking for reliability?
- How many miles do I plan to do?
- Am I buying it for practicality, for fun, or perhaps a bit of both?
- Do I want something luxurious or can I make do with something thrifty?
- How much am I willing to spend on such things as insurance, tax, services and fuel?
- What type of model and manufacturer am I considering?
Considering some simple questions as these can have a big influence on our eventual decision.
Some food for thought?
Justin Kavanagh is a recognised leader in automotive intelligence and vehicle data supply to the entire motor industry. He has almost 20 years experience in building systems from the ground up. As the Managing Director of Vehicle Management System, he understands the need and importance of trustworthy and reliable vehicle history and advice to both the trade and the public.
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