Is It A Good Time To Buy A Car?
In recent months, because of COVID-19, car dealerships and manufacturers have been offering special financing and incentives to entice consumers to buy new and used cars. Dealerships may have specific discounts like employee pricing, low to ZERO percent financing offers in addition to manufacturer rebates. Some car manufacturers are even offering deferred payment plans that allow consumers to delay the first payment on a new car purchase up to as much as three months in some cases. These offers can be hard to pass up if you're in the market for a new car. However, there are several questions and items you may want to ask yourself before you start testing driving new cars.
Consider the following:
- How necessary is a replacement or additional car? Many consumers have found that they are driving less because they are working from home.
- If you do not currently have a car payment, do you think it makes sense to add another payment, especially during these uncertain times?
- Do you at least have your 3-6 months cash reserve in place, before you add a car payment?
- How much will your new car increase your auto insurance premium?
If you do decide to make a purchase:
- Negotiate the PRICE of the car and NOT the monthly payment.
- Make sure that the monthly payment is not more than 10% of your household income; i.e. If you make $6000/month, you do not want your car payment to be more than $600/month.
- Do not finance for more than 48-60 months.
You can also check out websites like TrueCar.com or Costco
Auto Program, as these websites can provide additional information and
discounts. There are also websites like Carvana.com that will allow you to buy
and finance your car without having to step foot into a dealership. Cars can be
the second most expensive thing a person buys in their lives, next to buying a
house. Before you choose to buy or get into debt for a new car, make sure you
review all of your options so that you position yourself in to make the best financial
moves during the current climate.