My first question to him was, “Can you afford it? “
Like for everything else, we all should be asking ourselves this question before we buy, whether it’ll be a small purchase or a big one.
Buying a car is a SERIOUS business. Why? Because it’s a MAJOR purchase and it can REALLY affect your finances. Will you be able to afford a $400 payment, or whatever amount that is, every month for the next 5 to 6 years? Are the insurance and quarterly maintenance included in your budget? What if your car breaks? Do you have money for the repair costs? These are the same questions that I asked him.
USED vs. NEW???
A lot of financial advisers will tell you not to buy a brand new car because its value depreciates by around 20% the moment you drive it off the lot. I say otherwise. Blame it on my experience with a second hand car. If you can afford it, BUY BRAND NEW, especially if you’re a car ignoramus like me. Yes, the car loses its value the moment you drive it off the lot, BUT you will have the peace of mind that you are the first person to use the car. Aside from this, you also get the full warranty on the car which is usually 5-10 years. To me, paying the price of a brand new car is better than having to deal with the uncertainty (quite possibly hefty repairs and tons of headache) of a second hand car. Sure, car dealers have the “certified ones” with warranties but we all know how car salesmen operate.
So, my friend and I worked on the numbers and it turned out that he could actually afford to have a new truck. He just have to cut some of his spending so it wouldn’t be too tight on his wallet every month.
The key is, BUDGET BUDGET BUDGET. And it goes without saying, don’t buy something if you cannot afford it.