Car Buying – Five Most Important Steps
Car shopping can be very stressful. A wrong decision can have far reaching negative consequences that affect people’s lives. Therefore, car shoppers should consider all options before signing a contract. The following provides an explanation of some of the most important steps that a car shopper should consider.
Step 1 – Make A Decision on Car Type what is car subscription
A decision on car type is an obvious starting point which should be directed by your ‘needs’ as a car shopper as opposed to your ‘wants’. If you let ‘wants’ direct the needs, this can lead to an expensive mistake. If you are a car shopper and you want to understand your needs, these mostly evolve around:
1. Engine – the most dominant factors in this is are the fuel type (diesel engines are more efficient than petrol) and the size of the engine (which determines the power for speed and acceleration);
2. Transmission – there is one of three options, manual, automatic or semi automatic with automatic being an option for those that like to avoid changing gears because they spend a lot of time behind the wheel. Automatic vehicles are most often less fuel efficient than manual vehicles;
3. Size of the vehicle – what will be the average number of passengers seated in the vehicle for most journeys and is there a requirement for additional space?
4. Likely Usage – how frequently and how far will the car be driven each week? If it is a company car then the chances are that it will generate a lot of miles on longer journeys quickly. However, if it is a family car that is required for school runs and grocery shopping then there will likely be a large number of short journeys. For cars on long journeys the engine size and transmission type become important to optimise efficiency.
Step 2 – What Is Your Monthly Budget?
If you are not buying a car with cash and are looking to use car finance (hire purchase, car leasing or car loan), once you have made a decision that narrows down the car type, the next critical decision is to decide on your budget for monthly car payments. A general rule is that your total monthly payment shouldn’t exceed 20% of your net salary (ie; your take home pay) per month.
Step 3 – How Should You Finance Your New Car?
The four most common ways to finance a new car are by paying cash, by using hire purchase, taking out a loan with a finance company or by leasing the car. These four different finance options can be categorised in to two main groups of car finance:
1. Those with which you ultimately take ownership of the car (paying with cash, car loan or hire purchase – with hire purchase you don’t own the car until your final payment);