Buying Car: The Best Money-Saving Tips
It is a great feeling of achievement when you own your dream vehicle, an important milestone in life. Note that you are not just buying a car, but buying a lifestyle- hence it’s very important to consider many points before we make a purchase decision. In this article, I will mention the financial aspects, of how to save money while you buy a four-wheeler.
Let’s start with the important decision: answer the following questions before you decide whether to buy a car or not- as buying a car is NOT an investment decision but exclusively a “needs or wants” decision.
Is a car really necessary for me?
Are you thinking of buying a car out of impulse or for the feeling of a luxury possession or for necessity? Considering the long-term costs of maintenance, fuel, and annual insurance it will be a huge additional expense that you are taking on apart from the cost of the car.
So compare the cost that you incur if you hire a Taxi. Check if your travel requirement is fixed/limited/pre-determined. How far and how frequently do you travel? What are the alternative modes of transport available and how easily they are available? Remember there are so many low-cost transport service providers like Rapido, Ola, Uber, etc. If your travel can be managed with these, you are saving yourself from a wrong financial decision in the first place.
If your work involves irregular working hours or shifts and no transportation from the company or you live in a rural area it will be good to buy a vehicle.
What is my budget?
After necessity, budget is the most important thing to consider-check the questions below:
- How much can you spend on owning a car? This should be in line with your short-term and long-term financial goals and this decision should not hamper your other goals.
- Whether you have savings or you will go to a financier and avail of the loan? If you consider a Vehicle loan, again there are many factors you need to consider like, interest rate, processing charges, EMI (Equated Monthly Instalments), tenure, etc.
- If you consider an EMI option, how will you go about monthly repayment? Consider EMI only if your income is stable and is not variable like incentive/commission/seasonal or contractual income – because missing out EMIs can cost you a lot in long term affecting your Credit Score badly.
- Are you paying any EMIs currently? If you do so, it will be better to pay off the existing vehicle loan’s EMI before going to take another.
What is the size of my family?
How big is your family and how many people would actually use the car? If your family consists of one or more members who have a medical condition and may require a doctor visit anytime, or small children who too need frequent medical attention, having your own vehicle is a necessity.
Is there an availability of Parking Space?
This is a major concern in cities. If you live in a house where there is no parking space, you may need to find a place first or hire one.
The right buying decision can make you enjoy driving more peacefully than the feeling of having a status symbol. I will cover the other factors to consider with regard to Cost saving while buying Car in the next section.
She Writer Sandhya Naren, MBA, CAIIB is a Branch Manager of a Public Sector Bank, a Writer, a Storyteller, and a Women-Coach in Personal Finance. She’s the Co-founder of Manasa Learning Solutions, Life Skills Training Academy for women and children
