Things to Consider When Buying a New Car

Alright, buckle up folks! You’re thinking about buying a new car, huh? Maybe that old clunker in your driveway has finally bit the dust, or perhaps you’ve just gotten a little tired of praying every time you turn the key. But before you let that new car smell lure you into a bad financial decision, let’s pump the brakes and talk about a few things you need to consider. Trust me, your wallet and your future self will thank you later.

The Sticker Price Isn’t the Real Price

Let’s start with the basics. You see that shiny car on the lot with the big, bold price tag? Yeah, that’s not what you’re actually going to pay. Dealerships are like magicians—good ones, too. They’ve mastered the art of distraction. You’re focused on the sticker price while they’re sneaking in fees, extended warranties, and “special” add-ons that sound good but do nothing but drain your bank account.

Remember, the sticker price is just the beginning. Don’t forget about taxes, registration, and documentation fees. Oh, and if you’re financing, that interest rate is going to make sure you pay for that car twice if you’re not careful. Don’t let a smooth-talking salesman sweet-talk you into a payment plan that costs more than your rent. Be smart. Pay cash if you can, and if you can’t, get pre-approved for a loan with a low interest rate before you step foot on that lot.

Insurance: The Sneaky Silent Partner

You might be thinking, “I’ve got my down payment ready, I’ve negotiated a good deal, I’m set!” But wait, there’s more. Have you thought about insurance? Because let me tell you, that new ride isn’t just going to cost you at the dealership—it’s going to keep costing you every month when the insurance bill comes due.

New cars are like magnets for higher insurance premiums. Insurance companies know that if you’re driving around in a shiny new vehicle, it’s going to cost them more to repair or replace if you get into an accident. And trust me, they’re going to pass that cost on to you. Forbes Advisor highlights that the national average cost for full coverage car insurance is $2,026 per year.

But don’t panic—there are ways to keep that insurance bill from breaking the bank. First off, let Bancorp Insurance help you “shop around”.  We represent hundreds of Insurance companies and let me tell you, they are not all created equal, and they’ll offer different rates for the same coverage. We can take the stress out of this part of shopping and help you compare Coverage and Prices to meet your needs.   

And while you’re at it, think about your coverage. Sure, that full coverage sounds nice and all, but do you really need it? If you’re driving a brand-new car off the lot, then yeah, you probably do. But if you’re buying a reliable used car that’s a few years old, you might be able to save some serious cash by adjusting your coverage.

The Silent Killer of Car Value

Let’s have a moment of silence for the value of that new car you just bought. Why? Because as soon as you drive it off the lot, it’s already lost about 10% of its value. And in the first year? You can kiss goodbye to 20-30% of what you just paid.

Depreciation is a killer, folks. It’s like buying a house that shrinks every year. And the worst part? There’s nothing you can do about it. Except, maybe, not buy a brand-new car in the first place.

A lightly used car, say two or three years old, has already taken the biggest depreciation hit. It’s still in great shape, but now you’re not paying for the privilege of being the first owner. Plus, you might still get some of that sweet warranty coverage without the new car price tag.

Fuel Efficiency: More Than Just Saving the Planet

Okay, so you’re saving the whales, the polar bears, and the bees by choosing a fuel-efficient car. That’s great, but let’s talk about what it’s doing for your wallet. Gas prices aren’t getting any cheaper, and if you’re driving something that drinks fuel like a frat boy at a keg party, you’re throwing money away.

A fuel-efficient car isn’t just a green choice—it’s a green-in-your-wallet choice. Those savings add up over time, especially if you’re doing a lot of driving. And if you really want to see some serious savings, consider a hybrid or electric vehicle. Sure, they might cost more upfront, but when you’re not paying for gas every week, you’ll see the benefits in your bank account.

If you are buying an all electric vehicle make sure to add in the cost of your charging station. To install one at home it can cost an additional $5,000. Not to mention if you are on a road trip and you need to plug in most charging stations charges fluctuate with the cost of electricity in that area. So your not paying for gas, but you might be paying for electricity on long road trips and the cost of each kilowatt varies drastically across the country.

Maintenance: Because Cars Are High Maintenance, Too

Last but not least, let’s talk maintenance. Every car needs it, and if you’re not prepared, it can be a real budget buster. Some cars are notorious for expensive upkeep—think luxury brands with parts that cost an arm and a leg.

Before you buy, do a little research. What’s the average cost of maintenance for that model? Are the parts easy to find? How much does a set of tires cost? These might seem like small things, but over the life of the car, they can add up.

And don’t forget about insurance coverage for repairs. A good extended warranty or a mechanical breakdown insurance policy can save you a bundle if something goes wrong. Just make sure you’re not paying more in premiums than the car is worth.

In Conclusion: Don’t Let Your Dream Car Become a Financial Nightmare

Buying a new car can be exciting, but it’s easy to get swept up in the moment and make a decision that your future self will regret. Remember, the goal here isn’t just to get a new set of wheels—it’s to make a smart financial choice that won’t leave you eating ramen for the next five years.

So take your time, do your homework, and remember that the real cost of a car is more than just the sticker price. And for Pete’s sake, don’t forget about insurance! Because the last thing you want is for your new car to drive you straight to the poorhouse.

Bancorp’s insurance agents are available to provide you with a free review and consultation.  Contact Us – Bancorp Insurance Call 800-452-6826

Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our agents.