Keys to your first car purchase
By planning ahead, first-time car buyers can avoid monthly car payments and have a fairly good idea of how much money they will need in order to keep the car insured and running properly.
Choosing and buying your first car is exciting, it is one of life’s milestones. But it may also be a bit daunting. For a twenty-something person, it may be the first significant financial decision of your young life. With some foresight and the right strategy, purchasing a car can be a goal successfully achieved. It’s never too soon to set a goal and then capitalize your eagerness to attain it.
To get a clearer picture of the financial commitment of owning a car, consider the following key points.
How will you finance the vehicle? Although you would certainly enjoy selecting a new car or truck from the dealership showroom, be mindful of your budget and be realistic. Rather than committing to a monthly car payment, start saving well ahead of your planned purchase so that you can pay cash for a solid, low-priced car. According to Edmunds.com you can get a reliable vehicle for less than $10,000, in some cases far less. Besides not having to pay any interest on the purchase, you don’t have to worry about getting behind on your payments.
Estimate your maintenance and usage expenses. There are several online sites that can help you forecast what you should expect to spend each year to cover maintenance, repairs and fuel costs. Always consider safety over comfort. Another advantage of paying cash is that you can take the money you would have spent on a monthly car payment and “pay yourself.” That is, add that payment to your own car account each month and when needed, apply the funds towards routine maintenance or unexpected repairs. What can you expect to spend on fuel each month? Check out the U.S. Department of Energy’s fuel economy website.
Shop around for car insurance, it pays to ask questions. Consider if it is better to be on your parent’s policy or to have your own. The value of the car you purchase will determine whether you need full coverage or the basic PLPD coverage. Your behaviors can impact the price too. Ask if you qualify for any discounts, like a good student discount, having taken an accredited driver’s education course, if you are a non-drinker and a non-smoker or the fact that you haven’t had any accidents or tickets in the past. A good driving record could save you money.
If you are dreaming of buying a car, discover additional ways to prepare by enrolling in 4-H Exploration Days at Michigan State University this June. One of the sessions to be offered is entitled, “Keys to My First Car” and will highlight what you can do to prepare yourself to make a wise, informed decision. For more information about the event, contact your local MSU Extension office or call 1-888-MSUE4MI (888-678-3464).
To contact an expert in your area, visit people.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).