Saving Money Tips - Buying a New Car

A new car sounds lovely doesn't it? Imagine the purr of the new engine and the looks you will get as you drive down the road in the latest model of your chosen car. However, we also know that the new model of today will be the old superseded model in the not too distant future and that the value of the car will go down very quickly.

So with this in mind we really need to be careful when considering whether or not to buy a new car.

Before rushing off to the car yard, you should grab out a large sheet of paper and write up the top "Do I really need to buy a new vehicle?" Then let the brain cells take a journey and come up with all of the reasons that you can to justify going out and getting a new car. Underneath this, write down all of the reasons to justify why you shouldn't go out and buy a new car.

Here are some ideas to get you started and some common reasons that people write down:

1. Reasons to buy a new car

Car too small / big

Starting a family and need more room
Can't fit in all of my gear
Can't transport all of the kids and their friends around
It is just us now so we don't need such a large car
We are going away so we need more leg room and storage capacity

No air conditioning

It is just so hot each summer we bake in our car
No air bags

The car has never been fitted with air bags
Lacking accessories (stereo / cd player / gps)

We need to have a cd player
Some new vehicles have an in built GPS so we need one too
The stereo is broken so we need to replace the car

Costing too much money to run

I am always spending money on this car
The car always seems to be at my mechanic

Need to look good at work

My car is a status symbol of my wealth
My boss would look down on me if I didn't drive a new car
Having a new car will portray a message to my clients that I am very successful

Too old

My car is x years old so it needs to be replaced
I have had this car x years so it is time for an upgrade to a new model
This model is old, I need the newer model

Petrol guzzler

I am always putting fuel into this car
I checked my credit card statement and boy my car is thirsty
I used to put in $x of fuel a week and now I am putting in $y

Running too fast / slow

I can't keep up with every one else on the road
My foot is almost flat to the floor and yet we hardly seem to be moving
If I don't sell this I am going to do damage to someone as it just zips off so fast I can't keep in control

Want security of a new vehicle warranty

I do a lot of travel for work and I want peace of mind if something was to happen
If the car is under a warranty I won't have to spend any money on it

No longer road worthy

The mechanic said the car isn't road worthy
I don't think the car would pass a road worthy test

Want to keep up with the Jones

My friend has just purchased one of these new cars so I want one
The neighbours have just purchased a new car so we should also buy one

I have been offered a good trade in

The new car sales man has offered me a good trade in
I want to trade now whilst I can get good value for my current car

I want a diesel vehicle

I want to change from petrol to diesel as I heard it is more fuel efficient
I need a ute / 4wd / sedan

I want to change from a sedan to a ute
I need to trade the ute for a 4wd
I need a 4wd for my upcoming holiday
I need a ute so I can shift houses

2. Reasons not to buy a new car

Can't afford it

The repayments will be too high
It is a lot of money for me to spend on a car
The loan will take me 7 years+ to pay back

Don't really need a new car

I am being silly, I don't really need a new car
There are other things I need ahead of getting a new car

Old car is going well

My old car works just fine
I can always get from A to B so what else do I need

Too expensive

Although it is new, I feel it is still very expensive
There is a big gap between 2nd hand cars of 2-3 years to the price on these new cars

Will drop in value too quickly

I have heard as soon as you drive a new car out of the show room they drop significantly in value
2nd hand cars seem like a much better alternative, I have seen they are much lower in value

Expensive on-road costs and stamp duties

When I buy a new car I will have to incur extra fees such as on-road costs and stamp duties. Aren't these costs in the thousands?
Insurance will increase

When I get a new car, I know my insurance premium will increase significantly
Young family

I don't know if my kids will look after a new car or treat it well; they are always banging the car doors into things
I know that kids are kids and it is hard to keep a car nice with them around

Have better things to spend my money on

I do have a lot of other important items on my wish list; a new fridge, high school fees, reduce mortgage, etc
Work may provide a vehicle

Work may offer me a car as part of my package at my next salary review
3. Then you need to carefully look at both lists and to analyse all of the reasons you have written down

How important is the reason you wrote down?
Look through your list and decide which reasons you have written down contain something that is a must have - this might be for safety reasons or security
Be careful here and very honest with yourself with what you consider to be absolutely critical
Look through your list and decide which items you have written down is a nice to have but something that you could do without - this might be a gadget or feature of the car that isn't absolutely critical
Take the time to rank each item from 1 to 10 in level of importance
Look through your list of reasons not to buy a new car. How strong and valid are these reasons?
It is important that you spend a decent amount of time doing this exercise and that you are somewhere nice and quiet where you can really think about yourself very carefully. This exercise could save you thousands of dollars!

4. As part of your analysis you should now spend time looking for alternatives. Start with the items that are of highest importance to you.

Car too small / big

Consider hiring a trailer
Consider hiring a car for the holidays
Clean out your car and see what space you then have

No air conditioning

Check out the cost to have this fitted to your current car
No air bags

Check out the cost to have this fitted to your current car
Lacking accessories (stereo / cd player / gps)

How much will it cost to have one fitted
Can you use a portable cd player / stereo
How much is a portable GPS
Can you make do with the radio

Costing too much money to run

Work out how much your car has actually cost you over 12 mths
Seek a professional opinion on the vehicle from your mechanic or local automobile club
Look carefully at how you treat your vehicle. Are you causing some of this cost?
What about your driving habits? Is this the cause of costing you money? Ie heavy braking or is your foot too heavy on the accelerator

Need to look good at work

You can still look good in a later model vehicle
Talk to your boss about being provided with a company car when you need to entertain clients
Talk to your boss about hiring cars / taxis when you need to entertain clients or travel
It seems pointless trying to look wealthy by owning a new vehicle if it is causing you financial grief and hardship. You will not be successful in your career if you spend all day worrying about how to pay your bills
Consider that a new car may put some clients off - your services may appear too expensive or that you don't value money as you spend it on unnecessary items that decrease in value

Too old

How old is too old? There are some decent vehicles on the road that are 7-10 years old that are still running perfectly
Who states that there is a set time frame that you need to replace your vehicle
What will the newer model provide you with that your current car doesn't provide you with

Petrol guzzler

Look at how much running around you are doing and whether or not you can seek alternatives such as car pooling, doing multiple tasks whilst out
Has your car been serviced recently? You might have a problem with your car that is easy to fix that is causing the extra fuel consumption
Consider how much the price of fuel has risen recently. Is this the real reason your petrol has increased
How much of the fuel bill on the credit card contains other items such as food and drink that you bought at the petrol station?

Running too fast / slow

Has your car been serviced recently? You might have a problem with your car that is easy to fix that is causing this to happen
Want security of a new vehicle warranty

Understand what is offered under the warranty
Consider having road side assistance from your local automobile club in case of break down
Keep your vehicle regularly serviced
Travel with a mobile phone so you can call for help in the case of an emergency

No longer road worthy

Get a couple of opinions on the road worthy status of your vehicle from a mechanic or your local automobile club
Establish how much it will cost to get the vehicle road worthy
Seek a professional's opinion on this matter

Want to keep up with the Jones

Why why why, do you need to keep up with what someone else is doing?
Be an individual and live your own life and not those of others

I have been offered a good trade in

A trick / marketing strategy for selling new cars is to lure people in by offering a high trade in
You either get a high trade in or low purchase price - it generally doesn't happen that you get both
Is the salesman playing around with figures? They sometimes up the price of the trade in and lower the discount on the new car OR they sometimes lower the price on the new car and lower the price on the trade in
If you waited a year or two before swapping vehicles, what do you think you might get as a trade in then

I want a diesel vehicle

How much will it cost to get diesel fitted to your current car
Are there any government rebates in relation to diesel fitouts

I need a ute / 4wd / sedan

Can you hire the ute / 4wd / sedan for the particular period of use if it is only short term / one off
Can you borrow a friend's ute / 4wd / sedan
Is it worth paying a tradesperson to do your job to negate this requirement

Detective Heather Wood is Managing Director and writer for Money Detective Pty Ltd.

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