Reduce your financial burden before buying a car

For new car buyers a careful decision must be made for purchasing the right car. Don’t just buy a car because you need one; understand what would suit your purpose the best. Don’t go in for an expensive vehicle just because it is appealing; keep in mind that bigger vehicles have more taxes on them and cost more to maintain as well. But at the same time it makes no sense to go in for the cheapest vehicle on the market if you would need to replace it in a span of two to three years, as keeping one car over a span of six years reduces the expensive of buying two cars within the same time. Buy a car that will meet all your requirements for a long period of time.  

With new cars hitting the market near about every fortnight, buying a brand new car has never been this attractive a proposition. But is it wise to go in for a brand new model over your current vehicle? It depends on how old your car is and how well you have taken care of it. Under normal circumstances vehicles generally remain problem free for the first three to four years of ownership. This is the time you can consider going in for a new vehicle. 

However, the key to reducing the financial burden of buying a new car can be increased to double the period (ie, six to eight years) by buying the right car and the right variant of a vehicle that has been rated very well by customers and road testers. For example, if you had bought a Maruti Suzuki Swift ZXi back in 2007 and carried out periodic maintenance the car would be almost as good as new and that would give you little reason to buy the new Swift launched in 2011 as they are both roughly the same in terms of equipment, looks and performance. Only, your previous vehicle was more value-for-money as it cost less to buy a Swift ZXi in 2007 than it does now. 

This means you don’t lock up Rs 6.60 lakh (plus interest if you opt for finance) on a new car for at least another two years. 

And when the time does come for buying a new car depending on the rate of interest for vehicle loans and the current and predicted rate of inflation it would be wise to arrive at an amount for down payment of the vehicle and the amount to be paid in EMI. Read our story on Economies of Scale (inflation v/s cash down) to get a better insight on the matter.