A motor vehicle could be the second-biggest expense an individual would ever incur after a house. So a brand-new car purchase should be carefully studied especially if it is bought on financing, which actually increases the overall cost of the vehicle.
Also, the reality is that a new car never appreciates in value. In fact, some 10% of its value immediately goes out of the window the moment you drive it out of the dealership. And then, after five years or so, its value plunges to between 40% and 60%, and that’s based on its sticker price which does not include financing charges. Factor in financing charges and the value of a vehicle would be the equivalent of just 25% to 40% of its sticker price after said period.
But then, a brand-new car is still a must among motorists because it is assumed to be generally trouble-free compared to secondhand vehicles, at least for the first five years of ownership. Many motorists also do not know how to tinker with a vehicle, and so a brand-new car is what suits them. On the other hand, gearheads have little fear of buying a pre-owned unit because they know what to do to give it hassle-free service for many years.
If you belong to the first group, allow us to share 10 tips to guide you when buying a new car.
1. Select which type of vehicle you want. You just can’t go into a car dealership not knowing which vehicle to buy, and not all sales representatives will know what you specifically need. It’s hard to end up buying a midsize SUV, for instance, when all you need is a subcompact sedan. Consider these factors when choosing a vehicle type: number of seats; parking space in your house or area; diesel or gasoline; 2WD or 4WD. The number of seats is important because in the Philippines, strolling in the city or out of town is usually an extended-family event. Also, consider the other uses for your vehicle, like using it for hauling duties for a business you may own and operate. On the other hand, buying a van that can seat as much as 12 people is not appropriate if you intend to drive alone most of time.
2. Set a firm budget. After deciding the type of vehicle to buy, determine a fixed budget, including the down payment and the full price. Choose from a wide range of variants so you can decide which one fits your financial standing. When buying a new vehicle on financing, set the maximum amount you are willing to pay every month. Many new-car shoppers become victims of impulse buying, driving home with the big-ticket purchase even without having the resources to shell out for the monthly installments. In the end, they find themselves watching helplessly as bank agents repossess the car. Also, remember that there are other costs to consider when owning a brand-new vehicle, like insurance and maintenance.
3. Study all brand choices. Once you have decided which type of vehicle to buy—SUV, pickup, sedan, hatchback, van or MPV—it is best to study what the different brands have to offer. Gone are the days when South Korean cars were considered inferior to Japanese ones, and the Americans can no longer claim to be the best builders of SUVs in the world. Find out which brands have the best after-sales service, and which ones have high resale values for their models. Even the smallest things can spell the difference between an awesome ownership experience and a disaster.
4. Automatic or manual transmission. Making a choice whether to buy an AT or MT vehicle is of paramount importance, because the worsening traffic in Metro Manila has helped make cars with an automatic shifter more popular. Although there remains a significant price difference between an AT car and an MT one, the convenience of driving a clutchless car in traffic or even along the highways is too good to resist. On the other hand, there are motorists who prefer the driving excitement afforded by a vehicle with a stick shift.
5. Narrow down color choices. Decide on the paint job you want for your brand-new vehicle. Some owners choose a lighter color because it makes a vehicle more visible at night or daytime. Then there are those who want dark hues because these look a little bit cleaner compared to light shades if dust or dirt sticks to the car’s body.
6. Get the best offer. With so much competition, carmakers are trying to outdo each other in attracting potential buyers. And that is good for car buyers. So go shopping for a vehicle and visit all dealers near your area, and study the deals they are giving to you including financing packages. Getting the best financing package can save you thousands of pesos in monthly amortization. Also consider the freebies dealers and brands are offering. And we mean the ones that truly matter—like 24/7 free towing service or roadside assistance, and not just floor mats.
7. Choose the best dealership. Although it is hard to find fault among car dealers today because the intense competition is forcing them to be on their toes, there are dealers that provide better lounge areas and parking space, and have more service bays. Also, consider the location of the dealership. One that is far away from your residence may prove to be a hassle especially with today’s worsening traffic situation.
8. Research and research more. There are tons and tons of information on new cars available. You just have to know where to look; you can start with credible car websites and trustworthy forums. Do not just rely on the official websites of the car brands. Search for independent car reviews and join discussion threads with fellow consumers.
9. Ask around. While the Internet can provide a lot of information on brand-new cars, it is also best to interview friends, colleagues or acquaintances who own the vehicle you are planning to buy. Ask important questions about fuel economy, maintenance cost, reliability, drivability, ride and comfort, among others. Nothing beats actual real-world experience.
10. Know the cost of maintenance. Although this is the last item on our list of tips, this does not mean it is the least important. In fact, knowing the cost of maintenance of involved in owning a new vehicle should be among the top considerations of buyers. Most vehicles today require preventive maintenance service at 10,000km intervals, which can cost anywhere from P5,000 to P10,000 for cars priced below P1 million (those priced over a million bucks can cost you as much as twice more). Always bear in mind that the amount you spend in owning a vehicle doesn’t stop with the purchase. There are so many incidentals that it is prudent to consciously keep aside dedicated funds for them.