People who are considering purchasing a car in the near future must make a number of very important financial decisions.
Best-selling author and radio host Dave Ramsey offers his advice on taking the plunge.
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If you want to buy a car, a consideration must be included.
“Let’s start with a little reality check” Ramsey wrote. “Cars lose value like a bag of rocks, losing 60% of their value in the first five years! It’s not a smart investment. You should only really consider buying new if you have a lot of money to spend.”
With this in mind, Ramsey urges potential car buyers to understand how much they are capable of spending.
“The first step is to decide how much you can afford to pay for a car,” he wrote. “Leasing a car and going into debt to buy one are both bad ideas, so what you can afford depends on how much money you can pay up front.”
“If you don’t have the funds right away to purchase a used or certified pre-owned car, you’ll need to make room in your budget to put money aside each month,” Ramsey continued. “Determine where you can get by with less and how much you can afford to put toward your car fund.”
Ramsey also answers the question many in the car buying market have: is leasing or financing a viable option.
“Remember, leasing or financing a car will not help you build wealth,” Ramsey wrote. “It’s much easier to save around $500 a month (the average car payment) for 10 months and buy a used car with no strings attached. Do you really want to sign up for a payment plan and pay thousands of dollars extra for several years? “
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It’s a good idea to find the right used car
The personal finance personality advises most people to forget about buying a new car and pay as much as possible in cash.
“There are plenty of places to find used cars in your area,” Ramsey wrote. “Your local dealership probably has a website where you can see what cars they have in stock. And you can check sites like Craigslist to see what other cars are on the market.”
“Narrow your options down to a few cars that fit your price range and needs,” he added. “Consider factors like safety, speed, gas mileage, comfort, and how it handles in bad weather. Just because something fits your wallet well doesn’t mean it will suit your lifestyle.”
Before purchasing a used vehicle, Ramsey explains some important details to consider.
“When you find a car you like, it’s time to do some research,” he writes. “Research the Kelley Blue Book value of the vehicle to make sure the price is right for that year and model.”
“You should also check the history report on each vehicle,” Ramsey said. “This will tell you the accident history, repair information, potential recalls, and other important information about the car.”
Feel the car and understand its health
Ramsey then moved on to what he calls the fun part: taking a car for a test drive.
“Once you’re ready to get behind the wheel for your test drive, choose a route that allows you to experience different types of driving,” he explained. “The way a car handles on the highway will be different from the way it handles in the city. Pay attention to anything that seems strange. Does the car vibrate when you go over a bump? Is there- Are there any strange noises?”
The next step, Ramsey wrote, is to have the car fully inspected.
“Before spending a dollar on a used car, take it to a mechanic for a complete inspection,” he advised. “Salespeople can lie when there’s money involved. Even though the car may look and feel good when you take it around the block, you never know what might be going on under the hood .”
“Don’t feel embarrassed about requesting an inspection,” Ramsey wrote. “This is a common part of the car buying process. If the seller is hesitant or upset about your request, they probably have something to hide.”
Ramsey offered practical advice for car buyers to be realistic about their reasons for buying.
“Remember, the purpose of a vehicle is to get you from point A to point B, not to prove your social status to the world,” he wrote. “As tempting as it is to hit the road in a car you can’t afford, it’s more likely to be a burden than a blessing, especially if it’s not in your budget.”
“Chances are your car isn’t the first thing you think about in the morning or when you go to bed at night. The key to happiness isn’t a new car, so don’t pay for it like it is !”
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