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Five important things to consider before buying a car
There are three basic factors when a person buys a product or service, namely necessity, desire and investment potential. But there are more things to consider.
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Buying a car requires careful planning, not just because of how much the car itself costs but also other “hidden” costs. (Shutterstock/File)
There are many things that people need to consider before purchasing a car, such as comfort, security and efficiency.
The aforementioned factors are legitimate concerns, but you should also plan thoroughly before you finally make the purchase.
Budi Raharjo from personal financial planning service OneShildt told tempo.co that there were no wrong reasons to buy a car, including if they prioritized social status when choosing a model.
"[However] buyers should consider being more selective and wise when picking a vehicle that suits their need and financial ability," said Budi.
There are three basic factors when a person buys a product or service, said Budi, namely necessity, desire (as it offers comfort or social status) and investment potential (as it can make them more productive or create new income and contribute to their earnings).
Planning your finances before purchasing a car is a must in order to calculate the consequences that you will have to face later on.
The first thing to consider is function. Will the car fulfill your needs, desire or potential to invest?
Second, consider your own capacity, whether you'll be able to purchase it using credit or cash. If you pick the former, consider the interest you will have to pay.
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Third, consider the resale value of the vehicle. Ideally, when we see a car as an investment and necessary tool, we need to consider depreciation.
Fourth, consider the costs and taxes. The former includes operational costs such as fuel consumption, prices of parts and labor, routine service costs and insurance. Also consider the vehicle tax that you will have to pay every year, as well as the parking fee at your office or your residence if you happen to live in an apartment.
Fifth, compare purchasing the car with using public transportation or another available alternative.
"People usually plan to buy a new vehicle after they've been using their current one for five years. Hence you should calculate the total costs in a five-year duration; detail the costs you'll have to endure as the consequence of owning a car," said Budi.
If owning a car disturbs your cash flow, the quickest solution is to let go of the asset that has become a burden. Another alternative is to increase your income; however, this may take time that cannot be estimated.
"Like it or not, you should be brave enough to let go of the asset to lessen the damage. Then opt to use another mode of transportation that is more cost-friendly compared to your previous car," added Budi. (kes)
