Buying a car is a major investment. In the old days, we could either walk into a dealership or onto a used car lot, find the car we wanted, and drive away after a quick test drive. Today, purchasing a car is more complex, time-consuming, and often involves delays between selecting a car and being able to take that car home because of supply issues. Some of the things we need to consider when buying a car include what type of car we will purchase, how we will finance it, and what type of car insurance we need. While we may have to consider more options now when selecting a car, we can still find one that fits our lifestyle and gets us where we need to be.
The First Choice: Traditional, Electric, or Hybrid
When we are choosing what type of car we want, it often comes down to what type of engine we want to have under the hood. Traditional cars use internal combustion engines that run on gasoline. Hybrids run on a combination of gasoline and electricity. Finally, electric vehicles (EVs) are fully electric and are propelled by a high-voltage battery pack.
This means that it is critical for us to understand what fuel options are available. For example, in some areas, car charging stations are easy to find, while in other areas, finding them can be a bit more challenging. Choosing an electric or hybrid car can save us money in the long run (since gasoline prices can be so volatile) but depending on where we live, is not an option for all of us yet.
Choosing From Financing Options
How we plan on paying for our car can impact what type of car we want to invest in. There are two major types of financing: direct lending and dealership financing. Direct lending is when we borrow money directly from a bank, finance company, or credit union. A loan requires us to agree to repay the amount financed plus a finance charge over a set period. When we are ready to buy a car from a dealer, we pay it off with this loan.
On the other hand, applying for credit through the dealership entails us entering into a contract with the dealer. This contract is typically sold to a bank, finance company, or credit union, which will service the account and collect the payments. Note: while manufacturer-sponsored, low-rate, or incentive programs can be offered by dealers, they tend to be restricted to specific vehicles or have special requirements, such as a larger down payment or a shorter contract length.
Many lenders will offer us longer-term loans, but while these loans can reduce our monthly payments, their interest rates may be high. Furthermore, the longer the loan term, the more expensive the overall deal for us. Cars lose value quickly once they are driven off the lot, so with longer-term financing, we may end up owing more than the car is worth.
Choosing Insurance Options
Once we pick a car and know how we are going to finance it, it is important that we make sure the vehicle is insured. A comprehensive car insurance policy should cover property damage, medical expenses, and accidents. It’s also always a good idea for us to double-check the rates.
With a little bit of research, it is possible for us to shop around for a better deal or to obtain special pricing. For example, there are often discounts for disabled drivers or better rates for those of us with a good driving record. In addition, it is important to note that when we go to buy car insurance, we will need to bring our driver’s license. Finally, no one should put off getting insurance until something bad happens, because, at that point, it is often too late.
Today, choosing a car might be a bit more complicated than in the old days, but with a little preparation, anyone can find the car of their dreams. In the end, it often comes down to us choosing what type of car we want, how we can finance that car, and making sure to insure that car. When taking these factors into consideration, buying a car does not have to be a stressful experience.
