financial independence

Once you have reached financial independence, buying a car may become one of the most important items on your to-do list. Although the prospect of owning your first vehicle is exciting, it’s a major financial milestone that requires some serious planning and long-term commitment. Here are a couple of questions to ask yourself when shopping for your first car:

New or used car purchase?
There are pros and cons to each. If you are fresh out of college and have just started your career, you are probably still figuring out your finances. Generally, used cars cost less than new cars — and not simply because old model years have gone out of style. It is estimated that a new car depreciates by about 20 percent in its first year. A used car, however, has already depreciated by the time you buy it, so you can take advantage of a lower price tag.
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Make sure you also consider maintenance and repairs when deciding between new and used. Many dealers will offer some repairs and maintenance coverage if the car is under warranty, regardless of whether a car is new or used. But if you’re buying a car from a private owner instead of a dealership, you may not be clear on where you stand with the warranty. Since used cars are older, they may require more maintenance, which can cost you a considerable amount of money. Regardless of whether you buy new or used, you should understand the terms of the warranty so you can make the most of your purchase.

When buying a car, you also need to consider insurance. In some cases, it may cost more to insure a new car. But insuring a used car can be expensive if it doesn’t have certain modern safety features. Be sure to check with your insurance agent before you make your decision.