What You Must Keep In Mind Before Buying A Car
With a vast range of car loan offers by banks and credit lenders, owning the car of your choice has become easier than ever. That said, when people choose to a buy a car, not much thought goes into the finance part of it. Most people leave it to the bank to make the calculations and the assessments and set their eyes on the trophy — their brand new car. For those availing a car loan to buy a new car, there are several factors — revolving around the finance part of buying a car — that one needs to look into. Listed below are questions you need to answer before buying a car.
Is the car loan a possibility financially?
If your mind is all made up and set on driving the four-wheeler of your choice, the first thing is to slow down and consider the financial impact an EMI will make on your monthly expenses. The first thing before availing a car loan is to make sure that you have calculated the EMI. This can be done by using online EMI loan calculators. Once you have determined the amount, you can decide on the tenure of the loan — one that suits your finances. Keeping the tenure short for any loan is advisable provided that the EMI does not exceed 40% of your monthly income.
Have you kept in mind the finances for keeping your car maintained?
Apart from calculating the financial pressure an EMI will have on your monthly income, keeping in mind the cost of services and maintaining a car should also be your priority. Maintaining a car could be almost three times the amount you would have to shell out than with maintaining a two-wheeler. When taking out a car loan, this too has to be considered. Based on your assessment, choose an EMI amount that wouldn’t severely dent your finances for the month.
Why not buy a second hand car instead?
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If you’re one that is going to turn the keys of your ignition once a week, it’s probably a good option to rather look for a second hand car. If your finances suit a second hand four-wheeler, there are certain areas you will have to look into. Firstly, check the resale value of the car you wish to buy. The value of a car depreciates as every year passes by, and determining the depreciation value of your car is imperative before narrowing down on a sale. Also, check the documents of the car and ensure that they are legitimate. Cross checking if there are any pending cases on the car is a wise option as well.
Will at some point would you want to sell your car?
This is one question every customer needs to ask himself/herself when purchasing a brand new car. The resale value depends on the brand of the car, the manufacturer, the model, the condition, the insurance, etc. Keeping your car in good condition will help in getting a better price when selling it.
Where would I get my car serviced?
Most big car brands have their own service centers and apart from that the insurance you have will have selected network service centers where you can avail the benefit of cashless services or a reimbursement mode of payment. Knowing exactly where you would like to service your car is vital, rather than wait for the smoke to arise from your hood to then start contemplating on where to get it serviced. In this area, establishing a good rapport with your service center, will only up your chances of getting a flawless service — directly reflecting on your car’s resale value.
Have you considered the cost of insurance and the cost of additional accessories?
You’ve probably opted against having your car installed with a fancy music system as it could be cheaper to get it elsewhere and the selling price of your car has reduced marginally, but eventually you’d wish to get that music system in the cockpit and that’s going to be an added expense apart from the EMI that you pay towards the car loan. The next big expense you need to think of is the car insurance. An annual insurance premium could cost you between Rs.5,000 to Rs.10,000 and again, this too is an added expense apart from your EMI.
Having posed all these questions, the simple option would be to calculate all the above mentioned costs, along with the EMI. Owning a car is an expensive affair, but with some financial planning it could be an easy task. Lastly, make sure you ask yourself these questions, as you wouldn’t want to be that guy who had to sell his car to cover the pending loan. Plan in advance and plan smart.
