Buy a New Car – Photo courtesy of Canva
Transportation is essential to support socio-economic growth. This is why people prioritize car ownership next to home ownership. However, the current economic situation and supply chain issues are a challenge for those who are planning to buy a new car. Thus one must ponder if owning a vehicle is still an ideal option. In terms of convenience and practicality owning a vehicle definitely earns plus points. But of course, there are other factors to consider. Here is a look at some of them.
Is there a need for a new car?
Covid 19 protocols reduced mobility requirements for work and school so one might think that this would reduce the need for private cars. However, research has shown that there has been an increased preference for using private cars compared to public transportation and car-sharing during the early months of Covid 19. Confidence in public transport and car-sharing may have increased since then but safety concerns still drive people to go for private cars these days. If your work arrangement doesn’t entail much travel then public transport, Uber, or car rentals may be a more practical option for you. But if you want to be able to shuttle to and fro at your own convenience then it’s better to buy a car.
How much do I need to buy a new car?
The increase in demand and supply chain concerns resulted in a price increase in new cars. Non-luxury cars stand at an average of $41,500 over the past two years according to a Toyota executive. Even used cars are selling higher than their sticker prices nowadays. You’d also have to set aside funds for add-on fees for insurance, registration, titling, etc.
What are the other expenses involved in car ownership?
Car ownership is a long-term commitment that comes with regular expenses. These expenses have to be factored into your decision-making to ensure that you can afford to own a car and not just buy one. Here are some of the standard expenses that you’ll encounter.
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Fuel expenses. Oil price hikes have been experienced globally and pump prices are currently at around $4.87 per gallon in the US. Check your budget if it can accommodate fuel expenses after deducting your bills for daily expenses and amortizations. There are tools to help you calculate your MPG and come up with a more accurate fuel budget. However, you should also bear in mind that oil price hikes aren’t off the table yet so it’s prudent to make allowances for this.
Maintenance and repairs. According to AAA, the average cost of owning a new car is around $9,282 annually. This includes routine maintenance checks, oil change, tires, etc. It could go higher if you skip your maintenance schedule, prolonging repairs and exacerbating wear and tear conditions. Poor maintenance also negatively affects your car’s efficiency and value.
Insurance and other fees. These are fees that are renewed every year and must therefore be included in your budget. For a low-risk driver with a good record, car insurances usually run around $102 a month. Car insurance doesn’t just ease your burden on liabilities its also a requirement for renewing your licenses.
Can you afford to buy a new car?
This all boils down to budget. If you’ve got cash to spare then find a car that fits your budget. Finance experts say that you shouldn’t spend more than 10-20% of your take-home pay on a vehicle. You can compute your monthly payments using https://www.carpaymentcalculator.net/. If it’s beyond your budget then maybe you should consider buying used cars that entail much lower costs.
