Buying a New Car: Monthly Instalments or Instant Procurement?

by Darwin on June 21, 2011


Image courtesy of Dave Sand Ford

Buying a new motor isn’t cheap these days. It would be perfect if we could get one as and when we need and want it, but desirability and affordability are two separate things. This is especially true in today’s onerous economic climate.

While many may argue, legitimately, that a car is more of a necessity than most luxury commodities on today’s market, they are much, much more expensive not only to buy in the first instance, but to maintain in the long run.

There are a number of financial options available to us when it comes to paying for expensive items. This generally only applies to the initial purchase, allowing you to spread the cost of the car over a number of months, but is this a more dangerous road than it seems?

At first, it feels like you’re actually paying less, which produces the illusion that you have more money to spend on those other luxurious items on your list. But, in actual fact, you usually end up paying a lot more than you would if you had just paid for the car outright.

Paying for a car in full can potentially save you a lot of money since it allows you to avoid extra costs like interest. Sometimes paying in cash can lead to a decent discount, too, so get your bartering hat on before you see the dealer.

If you take the time to save up enough money for the car you want, then you are certain that you can afford it, but committing to an instalment plan is a much riskier business. There are all sorts of potential uncertainties that could land you in deep water in the future; for example, (I know you don’t want to hear it) the stability of your job, unforeseen financial outgoings such as medical bills or maintenance costs for the car itself.

Paying in full means you paid it in full, every cent. There will, consequently, be one less ball to juggle with your finances. You will have enough to deal with in ensuring that car ownership is as smooth as possible, so save as much money as you can, when and where you can.

Insurance, maintenance and rising fuel costs are just three of the things that can take control of your budget, so you will be even harder pressed for cash to cover these expenses if you are still paying out installments for the car each month. Give yourself more to play with when these expenses arise. Covering your car is more crucial than ever now, so be sure to check out the best car insurance to get the deal that suits your situation.

The point is that you can ease your financial pressure if you pay things off in the shortest possible time. This seems obvious, but it just feels so easy and almost irresistible to spread your money out as far as possible. It’s natural because it makes you feel like you’ve got more than you actually have, but, to be realistic, the best advice is: if you can’t afford it, don’t buy it.

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