To buy a new car is probably one of the least profitable bargains you can do. Ok, prove it!. Just take a look at a used car value book list. The first one to two years of an auto’s lifetime it will lose 30-40% of it’s price as new. A five year old car will have lost 65% of it’s original price. So, if you can accept to buy, not a brand new but a few years older model that almost look like a new one, you can save lots of money. My best advice to you is that if money matters at all, buy a cheap used car.
The retail values placed on many vehicles by these web sites can have even larger price differences – some as high as $4000 to $8000 dollars. These gigantic price fluctuations can leave a used car buyer spending $1000’s extra, depending on which guide he or she used. Moreover, private party and trade-in sale prices do not accurately account for vehicle condition.
So here we go, each factor is listed in order of importance. By the time you are done reading through, you should have a clearer idea of what truly affects a trade-in’s value. This will help you plan ahead by taking good care of the car you have now in anticipation for the time where you will want to trade it in. It will also help you buy a new car today that will be a great trade-in candidate in the future. Finally, it will prepare you to negotiate your trade-in’s value if you are currently buying a new car.
In case your pocket does not allow buying a new car then you can go for used car. For used car also loan is available. In fact some banks organize used car loan melas in India. These melas are gaining popularity because of savings in terms of price. When you buy a used car there are various things to be taken care of such as verification of the vehicle ownership, its accident history, maintenance record, quality checks and whether the vehicle is not a stolen one. For an individual it is very difficult to get the correct information about all these factors. In car loan melas it is banks responsibility to take care of such formalities before displaying the car models. There is a norm banks have to give one year warranty on any used car.
Assuming you are applying for a car loan, like most of car buyers do, the rule of the thumb is simple: the amount of monthly mortgage should not exceed to 20% of your monthly income less tax. Anything higher would compromise other expenses and can definitely give you great financial stress. For example, if your monthly income less tax is $500, the maximum amount of car mortgage should not exceed $100. Now, you might say, “That’s okay, I can buy a car anytime.” Not too fast. Remember that your financial responsibility on owning a car is not limited to your monthly fee. Factors such as gas, maintenance, etc. which have monetary equivalent can eat a large chunk of your monthly budget significantly. Also consider your existing loans, monthly credit card bills, house mortgage, etc.
Finally, the the car is priced higher than cash down value. For example in a zero percent scenario, the car is offered at say $100,000 on display for 2 years to pay having a monthly payable amount of $4,166. The $100,000 price is actually still higher than the actual value of the car. The car dealers usually know that the Canadian blue book value is only say $70,000 but if offered at zero percent credit, they would price it at $100,000.
Classic car insurance has been available for years. You need to check with your provider, but usually there are some minimal driving restrictions relative to mileage, say less than 5000 miles per year. Many will require that you have a day-to-day car already registered so the classic will not be used for routine transportation.
Also keep in mind that as time moves along, the factors listed above begin to become less relevant. If your trade-in is less than 6 years old, the list applies to you. If you trade-in is more than 6 years old (give or take a year depending on the model), than this list becomes less relevant.