Financial Planning Before You Buy Your First Car

Preparing to buy your first car is indeed one of the most exciting times of your life so far however, when making the decision it is important to think very carefully about every step instead of jumping in to it blindly. Research has shown that many first time car owners spend far more money on their cars and their surrounding investments than they need to, with one reality television show showing a teenager had spent a whopping nine thousand two hundred dollars more than she would have had to pay if she had done adequate research before buying her car. 

Calculating your ability to pay for your car long term

Like most teenagers and young adults, you are likely to find that you will not be able to afford to buy the car in one go, you may need to pay an initial deposit and then pay of your car loan monthly. However, it is vital that you remember that while you are paying off your investments, the value of your car is depreciating and thus, when you have finished paying off your car loans you may find that the resale price of your car is far lower than the price you have paid making your purchase a loss rather than an investment. In addition to this, many new car buyers fail to realize that buying a car involves many other additional payments that need to be made outside of the actual price of the car. You will need to upgrade your home in order to accommodate a new car by installing a garage if you do not already have one, or upgrading your existing garage by install new garage door motors and security alarms for your garage.

In addition to this, you will need to pay a large sum of money for your cars insurance and it would be a good idea to get personal injury insurance for yourself in case of any minor investments. In the long run, you are likely to find that garage door motors and insurance are only the tip of the ice burg when it comes to expenses involving your new car and therefore it is important to be prepared. For this reason, it is important to start planning your new purchase at least six months in advance, looking in to different car options, their fuel consumption and your own finances.

It is important to start thinking about how you are going to pay for your car. Most teenagers and young adults do not have the luxury of having their parents buy their car for them and thus, you may have to get a part time job with a steady income before you purchase your car. As a rule, think about whether you are able to pay a minimum of twenty percent deposit down on your cars actual price. If you are unable to do so, it is likely you will end up spending far more than your cars actual value on the long run.