Buying a car is a major life decision. And if you’re a first-time buyer, you’ll want to make sure you’re getting one that fits your needs — but also one that is a wise financial choice. While certain cars will be a reliable and affordable form of transportation for years to come, others can hurt your wallet, costing you more than necessary in insurance premiums, car payments, and maintenance costs.
Depending on your lifestyle, lots of different cars may fit your needs. But there are a few factors you should consider to help you make sure you are getting the best deal. We’ve compiled some of our best advice to help you make a wise purchase for your first vehicle.
Buying New vs. Used
Buying a new car can be appealing. Driving a shiny new car with all the latest bells and whistles straight off the lot is exciting. However, there are some financial downsides to purchasing a brand-new car.
For one, they can be quite expensive. According to US News, the average new car is around $37,000, while the average used car costs around $20,000. In addition, new cars depreciate in value significantly over the first year. In fact, new cars lose value as soon as you drive them off the lot.
However, purchasing an older, used car comes with downsides as well. Older cars likely have lots of miles on them and may have less time before major mechanical issues develop. To get the best of both worlds, shop for cars that are just a few years old. This helps you avoid the deprecation hit while also ensuring that you are buying a car with many healthy years ahead of it.
Depreciation: How It Varies
If you are still interested in purchasing a new car, it’s important to consider the variations in depreciation rates among different types of vehicles.
For example, certain models are in high demand and are more likely to retain their value, including hybrid vehicles and those with efficient fuel economy. On the other hand, luxury cars are typically among the fastest-depreciating vehicles. Buyers of luxury vehicles are much more likely to want to purchase the newest model rather than a used one.
Safety is always important in a vehicle, but if you’re a new driver — or the parent of a new driver — it can be even more important to prioritize safety features in your choice of vehicle. Teenagers are more likely to be involved in an accident, and when you’re new to driving, you may have yet to develop optimal defensive driving skills.
Luckily, lots of car models now have advanced safety features. These include lane departure warnings, rear-view cameras, blind-spot detectors, and other crash avoidance mechanisms. In addition, certain cars are designed to react or crumple in specific ways during a crash, minimizing the risk to the driver.
According to US News, sports cars, large SUVs, and small cars are some of the worst choices of vehicle for new drivers. A mid-size sedan or small SUV are some of the safer varieties.
Factoring in Insurance Costs
The car you buy doesn’t just impact your car payment — it also can affect your insurance payment. Insurance payments are calculated based on factors such as how safe a vehicle is, how much the vehicle will cost to repair, how much damage it is likely to cause, and how likely it is to be stolen.
Thus, insurance premiums will vary from car to car. For example, expensive, sporty cars are more likely to be stolen and will be more costly to repair and large SUVs can cause a lot of damage. As a result, insurance premiums for these cars will likely be higher. Conversely, a mid-range commuter vehicle like a sedan will likely have a lower insurance premium across the board.
Aligning with First-Time Buyers Programs
Many financial institutions have programs to help a first-time car buyer finance a vehicle. However, these programs typically have requirements regarding the types of vehicles that qualify for the program. These requirements often include limitations on the cost of the car, the age of the car, and the number of miles.
Here at Foothill Credit Union has a first-time buyer’s program that can help buyers qualify for a car loan and offers special rates for certain vehicles. In this case, you’ll want to make sure that whatever vehicle you are purchasing will qualify for these perks.
To learn more about the First Time Buyer Program at Foothill Credit Union, you can visit us at the following link.
Learn More About Our First Time Auto Buyer Program