If you’re in the market for a new car, you might be trying to determine which one makes the most financial sense. After all, purchasing a car is an investment – it’s not something you typically do on a whim. It’s also something that can quickly eat up your savings if you don’t do your research and get an idea of what kind of car will suit your needs and budget.
Fortunately, there are several cars at various price points that have proven to be a significant investment and provide excellent ROI (return on investment). Whether you plan to drive your car, like the KIA Carnival for the next few years or intend to sell it once it has depreciated in value, there are several things to keep in mind when choosing the right car for you.
Research the Brands and Models You’re Considering
When shopping around for a new car, it may seem like all of the facts and figures are in your favor and the numbers will work out in your favor no matter which model or brand you choose. However, there are many factors to consider when purchasing a new car, such as resale value, annual maintenance costs, fuel efficiency, and more. Doing a little research into the brands and models you’re considering can give you a better idea of which one makes the most financial sense. If a friend owns that same car, ask them about their experience with it. If you can’t find any information online, be wary of the car. A car with very little online information could be a red flag.
Research Depreciation Values
You may have heard the term “new car smell” thrown around when it comes to purchasing a new car, but what does it actually mean? You’ll most likely notice that new cars have a distinct scent, which is actually from the chemicals used to clean and sanitize the leather and plastic components of the car. When you purchase a new car, it will lose value almost immediately. Newer cars will lose value at a higher rate than those that are two or three years old. The amount of depreciation that a car will experience varies from brand to brand and model to model, so be sure to thoroughly research the models that interest you.
Research Resale Values
In addition to the immediate loss in value that a car will experience when you buy it new, it will also have a lower resale value. The good news: the more miles are on the car, the more the resale value will decrease. This means that if you buy a model one to three years old, you can get more bang for your buck. And, if you’re planning on keeping the car for a few years before selling it, buying a model that is one to three years old will give you a better return on your investment since it will have a lower resale value.
Research Repairs and Maintenance Costs
Another thing to keep in mind when purchasing a new car is the cost of repairs and maintenance, as well as how easy or difficult it will be to find parts for the car. Although newer models typically have fewer problems than older models, it’s important to keep in mind how easy it will be to get parts for the car. You don’t want to be stranded on the side of the road with a broken car that is difficult to repair. If you live in an area that is known for having bad weather, it’s also important to consider how resistant the car will be to weather damage. If you live in an area that experiences a high level of snowfall, you don’t want to buy a car that isn’t equipped with winter tires.
Research Year-to-Year Comparisons of MSRP
The Manufacturer’s Suggested Retail Price (MSRP) is the suggested price of the car that the manufacturer will charge dealers for the car. This price will fluctuate from year to year and model to model, so it’s important to keep this in mind when purchasing a new car. If you purchase a car that has an MSRP of $30,000, it will probably be worth $20,000 at the end of the year. If you purchase a car that has an MSRP of $25,000, it will probably be worth $22,500 at the end of the year.
Research Tax Breaks and Incentives
When you purchase a car new, you can deduct the sales tax from your taxable income, but not the sales price of the car. In many states, however, there are state and federal tax incentives for purchasing a new car. Depending on your state and financial situation, buying a new car could actually save you money. If you own a business and plan to purchase a car for business use, you can also often deduct the cost of the car from your taxes.
Owning a new car is an exciting experience, but before you sign the paperwork and drive off the lot, you should be aware of all of the numbers that go into purchasing a new car. There are many factors to consider when purchasing a new car, including resale value, depreciation value, maintenance costs, and more. Doing some research into the brands and models you’re considering can give you a better idea of which one makes the most financial sense.