Buying your first car can be a dream come true. But if planned poorly, the entire process can also quickly turn into a nightmare. You have to consider a number of things, such as how much you have in the bank, how much spare cash you have on hand, your needs and so on. Here, we’ll go through 6 tips that can help you make your first car purchase that much easier!
Save time with a pre-approved loan
A pre-approved loan is exactly what it says on the tin. You get a loan approved before you buy or even see the car. This really helps with budgeting and staying on track. By setting expectations based on your loan, you won’t get distracted by the shiny new car that is out of reach.
Getting a pre-approved loan also reveals the health of your credit score. If your credit score has problems, you can fix it before you actually buy your car. Doing so can net you a larger loan, a better interest rate, or both before you buy!
Be wary of long-term loans
Interest rate is something to always keep your eye on. The longer the loan period, the higher your interest rate becomes. In an ideal situation, you will want a low interest rate with a short loan period. That way you minimise how much you pay back.
Monthly and total Repayments of a RM100,000 loan with 3.5% interest
As you can see in the table above, even though your loan is fixed at RM100,000 with a 3.5% interest rate, the longer your loan period, the more you pay back in the end. However, sometimes a longer loan period can be useful. As the monthly loan repayments are lower, the extra money can be used for something else, like paying off another loan. So whenever you buy cars, you will need to balance your monthly and long-term loan commitments with other priorities you have.
Hidden maintenance costs
It goes without saying that different cars have different maintenance needs. And big cars such as SUVs or 4x4s are more expensive to maintain. So if you are upgrading from a hatchback like a Perodua Myvi to an SUV, don’t forget to factor this in! You might be shocked by how much upkeep can cost because just the tyres alone can cost a bomb!
Read more: SUV tyres: a hidden cost?
So to buy cars the smart way, check out how much you are expected to spend on it monthly first. That way you won’t be surprised by the extra charges that come up after you buy.
Plan for when the warranty expires
Car repair costs can be expensive. Thankfully your car comes with a warranty for the first few years, depending on the model. This warranty will cover any part that is worn out or breaks before the warranty expires. But when your warranty expires, you will have to begin to pay for the repairs out of pocket.
Either be ready to fork out a lot more money on maintenance or sell your car when the time comes. If you are trying to figure out how much your car is worth to be better informed on your decision, you can visit myTukar and get your car valuated for free!
Get one that suits your needs
Different families and even individuals within families, have different needs. This ranges from commuting regularly, and long-distance outstation trips, to picking up the kids from school. So if you find a car that suits your needs but not your budget, you should check out a variety of different models that are similar to the car you want before you buy! Who knows, you might find something that fits your budget and needs better!
Read more: 6 amazing family cars
Buy a used car
Used cars are cheaper and can save you a pretty penny. As the first owner paid for the car’s depreciation, you get a much cheaper car. If you get a car that has gone past its inflection point, you will be able to buy a car at a much cheaper price!
For example, a Mercedes Benz C-class depreciates steadily after the first year of ownership but experiences another drop in the fifth year. Depreciation then speeds up until the eighth year, when another big drop in value occurs. So if you want to buy a Mercedes C-class, the best time to do so is after this drop, in the car’s fifth and eighth years after hitting the road.
Not to mention that myTukar can simplify your decision-making. You can choose from a panel of loan providers and see how your down payment, varying interest rates, and other factors affect your monthly loan repayments. You can also get maintenance packages as well as a 12-month engine and gearbox warranty! Not to mention if one car does not suit you, you can return it in 5 days, no questions asked!