Tips on Purchasing a Vehicle and Automobile
expenses - This
Page Is No Longer Updated
Before you arrive at the dealership.
- Do some research on the dealership and the make and
the model of the car you are looking at?
- Determine how much you can finance and afford to
pay every month.
- Get a copy of your credit report so you are aware
what the creditors will see. Errors or accurate information
can impact your ability to get credit and or your finance
rate.
- Identify your transportation needs.
- Compare finance rates and quotes between different
banks and the dealership.
Leasing a Vehicle Vs Financing
a Vehicle
Leasing
- The monthly payments on a lease are usually lower
then monthly finance payments on the same vehicle because
you are paying for the vehicle’s excepted deprecation
during the lease term, plus a rent charge, taxes and
a fee.
- Compare different lease offers and terms, including
mileage limits, and also consider how long you would
like to keep the vehicle.
- Another important consideration is the mileage limit;
most standard leases are calculated based on specific
number of miles you can drive, typically 15,000 or fewer
miles per year. If you exceed the mileage limit set
in the lease agreement, you will probably have to pay
additional charges when you return the vehicle.
- You are also responsible for damage, wear and tear
and missing equipment on the vehicle.
- Typically a lease agreement is three years.
- Car insurance is usually higher for a leased vehicle.
Financing a Vehicle
- The dealer may be able to offer you manufacture incentives,
such as reduced finance rates or cash back on certain
models. Once the terms of you finance agreement is complete,
the vehicle is yours. You do not have to return the
vehicle to the dealership upon completing your finance
agreement.
- There is no mileage limit with a financed vehicle.
- Typically a finance agreement is between 4 and 6 years.
Determining How Much You can
Afford
- Before purchasing a new vehicle, make sure you have
enough income to cover your current monthly living expenses.
Automobile Expenses
- Insurance - Liability insurance
is required to register a vehicle, while collision and
comprehensive are mandatory with bank or dealer financing.
Between $50 and $500 a month may need to be budgeted
depending on your zip code, age, gender, marital status,
your driving record and your family's (tickets &
accidents), and finally the year, make, model, and type
of vehicle you're insuring.
- Fuel - The US Department of Transportation
reports that most new vehicles are driven 15,000 miles
per year, while the average used car is driven 13,500
miles. Combine that with an average mileage of 20 mpg,
with fuel at $1.50 per gallon, and your monthly new
car fuel bill should average about $95. Beware, an SUV
or large pick-up can double your fuel expenditure. Used
cars will be about $5 less per month.
- Maintenance - the final hidden costs
are maintenance (oil changes, tune-ups, tires, brakes,
exhaust, car washes), and repairs (heating, air conditioning,
cooling system, engine, transmission, and driveline).
Some new cars come with free maintenance for the original
warranty period, but with most new cars you're on your
own. Figure on $30 per month for the first few years
of a new car's life. With a used vehicle, figure a little
more, about $50 per month. Repair costs are easy to
budget on a new car. You won't have any repair costs
until the factory warranty runs out (in three years
or 36,000 miles, typically). Used cars are another matter
entirely. A smart motorist will budget $50 a month for
repairs on a late-model used car (less than 5 years
old, less than 80,000 miles). A good extended warranty
will cost about the same amount of money, but I prefer
to manage my own auto expenses. With luck you won't
have any for a while, but make sure the money (or warranty)
is there. Older used cars (more than 5 years old, more
than 80,000 miles) will need a little more money set
aside, say $75 per month. Remember, add the maintenance
and repair totals together: budget new autos at $30
per month, late model used cars at $100 per month (less
if it has a warranty), older used vehicles at $125 per
month.
Top
|
