The path towards buying a new used vehicle should always begin by identifying needs and budget. Every person and family will have different requirements or expectations from any given vehicle.
Need
Needs must take into account what the vehicle will be used for. A two-child family (that does not play hockey) will get away with a 5-seater crossover whereas a family with 3 kids will need to look into a larger, three-row vehicle. Other considerations include towing, ride height (if aging parents need rides), fuel consumption and how the vehicle fits into the garage.
Budget
Sometimes, oftentimes, that extra grand cash-wise quickly turns into a financial headache far more than one would expect. The catch is that, after all, it will only cost an extra $150 a month. The key, as in buying or leasing a new vehicle, is looking at the total cost. Here again, fuel consumption may make or break the deal. Insurance is another hefty amount to include in the sum.
Tip:
- A fixed budget will keep you away from terrible temptation. It is dangerously easy to get carried away with the desire for the slightly better equipped model for only $3,000 more. This is especially true when considering that the difference may have been 2 or 3 times that amount when the vehicle was new.
BUDGETING AND NEEDS
Needs
They are fairly simple to determine but can be difficult to follow to a tee when temptation gets in the way. Here are some fairly obvious yet important examples to consider:
- Personal transportation
- Performance driving (track applications)
- Family considerations (are ingress and egress easy enough for grandma?)
- Towing
- The list goes on and on...
Budget
This is another simple step. Once again, it can be difficult to stick to but that's another issue.
It will always determine the condition, age and generally the make of the vehicle purchased
- Some cars cost more to maintain than others
- If the money is borrowed, take into consideration the interest on the loan in the total expense
- If financing is being used, calculate any advantages to putting a cash-down versus none at all. The interest saved could be added to the purchase price
- Insurance costs also need to be taken into account. The newer or higher trim or more powerful car may be costlier to insure
- Rising fuel prices need to be part of the equation as well
Scenario
The Johnson family has a boy and a girl. Both kids play winter ice sports and therefore lug around lots of equipment to each game and practice.
Although their $25,000-35,000 budget could allow them to purchase a new compact SUV or crossover (they know they no longer want a minivan), they understand that they need quite a fair amount of cargo volume. With a larger vehicle comes higher gas bills and so they have decided to look into a three year-old Ford Explorer.
Their search online through reviews and ads has them come face to face with a five year-old Audi Q7 within their original budget. Although more attractive and better equipped, it has 40% more mileage and is no longer covered by the manufacturer's warranty. The Explorer is still covered and has travelled fewer kilometers.
As both fill their requirements, the decision comes down to a logo and medium and long term ownership costs.
