Many people need reliable transportation to get to and from work. If you're like most people, your car will be the second most expensive thing you buy after your house. From what I've learned about personal finance, how you buy a car can have a big effect on your credit score and overall financial situation. If you buy a car the wrong way, it can put a strain on your finances that will be hard to get out of.
Can You Spend That Much?
At the time this article was written, the average American made about $33,000 a year. Most new cars cost much more than $12,000. This means that for most Americans, the cost of a brand-new car takes up a big chunk of their annual income. Most people can't pay $14,000 for a brand-new car all at once, so they take out car loans. Taking into account the interest that must be paid, it can take the average worker up to 7 years to pay off this loan. At the same time, the car's value will go down. Once it's paid off, it won't be worth as much as it was when you bought it.
Safety at work
Also, keep in mind that most people don't stay at the same job for seven years. A lot of people, especially young adults, may have more than one job in the same year. This shows that there isn't much stability, and it's easy to get into financial trouble if the economy suddenly goes down and jobs get harder to find. Because of this, you shouldn't get a car loan. Instead, you should think about buying a used car. Getting a used car instead of a new one has many benefits.
How Getting Used Can Help
Most of the time, used cars cost a lot less than brand-new ones. This makes it easier to save money for them. They are usually sold by private owners instead of companies, who are usually more flexible. When you buy a car at a wholesale price, you save money. When you buy a used car, you won't have to pay interest like you would with a car loan. But there are also some bad things about buying a used car. Used cars usually have a lot of miles on them and tend to break down much more quickly than new cars. This could force you to pay a lot of money for repairs.
Can't Addon
Used cars don't have the same options that new cars do. You can't choose the colour or other accessories; you get what you see. You can't do much about this, but before you buy a used car, you can have a mechanic check it out to make sure it doesn't have any mechanical problems. If the transmission breaks, it could cost you more than $1000 to fix it, which could put a strain on your finances. You should only buy used cars from companies that are known for making good cars.
Pay what it's really worth, not what you're told.
You should also look up the bluebook value of any used car you want to buy to make sure the owner isn't asking too much. If a car's bluebook value is $3,000, you shouldn't buy it from the owner for $4,000 unless there's a good reason to. Don't get a car loan unless you have a stable job, a high income, or a lot of money saved up.
