Buying a new car is an exciting time. Browsing around car yards, looking up new features and searching different makes and models can be fun – until you see the dreaded price tag that comes with it. Much like houses, cars are a long-term purchase, so a decision to buy a car shouldn’t be made lightly.
There are many factors to consider before pulling the trigger on a certain vehicle, including what purpose this car will serve, whether you plan on extending your family and how buying a new car will impact you if you’re trying to save to buy a house. Let’s take a closer look at how some of these factors may influence your decision.
Saving for a house
Houses and cars are both big, long-term purchases. If you’re trying to save for a house and you decide you need a new car, pull yourself up and ask yourself a few questions.
- Do you need a new car right now?
- If there’s something wrong with your current vehicle, will it cost less to fix than it will to buy a new one?
- Do you need something brand new, or could you look at something second hand?
- Are you prepared to accept that this may impact your goal and timeline of buying a house?
If you still wish to go ahead with the purchase, you will need to decide whether you should finance or purchase the car outright, While there are pros and cons to both, you need to work with what works best for you if you still want to meet your goal of buying a house.
If you’re close to securing a house, think about whether buying a car is right for you right now. Buying a car adds to your debt load, which can make you appear to be a riskier borrower. That could mean mortgage lenders are less likely to approve you for a mortgage loan. Talking to a broker about your options will help you ensure you’re still on track to achieve your goal of buying a house and how you can go about purchasing a vehicle.
To learn more about how a lender will assess your application, read our blog.
Planning to extend your family
Another factor to consider when looking at a car is if you’re planning to start or extend your family. Whether it’s your first child or not, there are some questions you should ask yourself, including:
- Do we need the expense of a new car now that we’re having a baby or is the one we have ok?
- How big are we planning on our family growing so we don’t need to upgrade again in a couple of years’ time?
- What safety features do we want this car to have?
- Will we comfortably be able to fit a baby seat in the back?
- Is the boot big enough to fit a pram?
You’ve probably seen vehicles that have been labelled as ‘mum cars’ and that’s for a good reason. Space is everything when it comes to kids, so having enough room not only in the back seats but the boot as well, is critical for parents. A good tip to keep in mind when shopping around is to look at the boot – if it can’t take a pram plus at least three decent sized bags, you need to look elsewhere.
For more information, read our blog on children and finances.
What purpose will your car serve?
There are certain questions you should ask before purchasing a car. Although it might feel obvious, one of the main questions is the reasoning behind why you’re buying a car and what purpose you want it to serve. Some things to consider when thinking about the purpose of your purchase include:
- Is this car going to be a family vehicle? If so, you need to consider size and space.
- Is this car going to be a leisure vehicle i.e., in addition to the one you already own? If so, you need to consider additional insurance costs and if this is a necessary purchase that aligns with your long-term financial goals.
- Is this car for work? If so, you need to consider what specifics you’re looking for that your current vehicle doesn’t offer.
- Is this vehicle a holiday car? If you do a lot of camping and off-roading, you need to consider which one will best suit this lifestyle.
Everyone uses their car for something different. Some use theirs solely for everyday purposes like commuting to and from work or going to the shops, while others need a durable vehicle for off-road driving. Whatever your purpose may be, make sure you do your research and talk to experts in the field to ensure you’re getting the best car to suit your needs, along with the best payment plan for you. Remember, be very cautious when it comes to financing at car dealerships.
Read our blog on Car Dealerships and the Finance Inflatable Pitfall.
Making sure your budget works
As with all your financial decisions, you need to make sure your budget covers not only the cost of a car but everything that comes along with it. If it’s a significant upgrade from your previous vehicle you need to be prepared for increasing costs of insurance, servicing and even petrol. There are other things you always need to incorporate into your budget too, including what would happen if your car unexpectedly broke down or your tyre blew out, and how you would cover that financially. Having a rainy day or emergency fund is a great way to cover these types of things.
If you decide to finance your car instead of purchasing it outright, you’ll need to factor your repayments into your current budget to see whether they’re manageable while still giving you enough leftover money to spend on things like going out for dinner or a movie.
Head to our blog for more budgeting tips and strategies.
Buying a new car is a big life purchase that shouldn’t be made in the spur of the moment. There are many things to consider such as whether you’re extending your family, planning on buying a house and what purpose this car will serve. When it comes to looking for your next car, get in touch with one of our team today.