A few points to keep in mind when you’re buying a car

Buying a car is often a decision with many options and questions. Not only will you need to think of the make and model, there are also the questions of buying new versus used as well as cash, financed or leased.

These questions are relative to everyone financial abilities and aspirations for their next car. But understanding some main pros and cons for each option can help you make the best decision for your situation.

In addition, you must think of your preferences and have realistic expectations for the costs involved. For example, an old used car can be inexpensive, cheaper to insure, and easier to pay for in cash, but all of that comes at the expense of reliability and ongoing repair costs. So it may not be a good option for someone whose priority is to have reliable transportation and predictable costs.

So here are a few points to keep in mind when you’re buying a car.

Warranty

New cars typically come with warranty and service packages. But many newer used cars also could be still under warranty and you could take over a service package or buy one. If you’re not set on having a new car, you can save a good amount of money by buying a low-mileage used car that still comes with those two perks — both are likely to save you a bunch over the early years of owning the car.

Warranty will give you the piece of mind, but you need to understand what it covers and still do your due diligence in terms of picking a make and model that won’t have issues shortly after the warranty expires.

Insurance

Auto insurance is a major ongoing expense. If you’re financing a car, your lender is likely to mandate minimum requirements for insurance, which lasts for the entire term of financing. So be cautious and aware of this cost as you shop around, because you might be lured with low monthly payment to spread out your car payments for years to come without realising the insurance cost.

In addition, you must be aware that a newer car could depreciate faster than you pay off you loan. Insurance would pay you off the car value not what you owe your lender. There are types of insurance that could cover this gap, or alternatively, you could put more money down to reduce the gap.

Other insurance basics apply for new and old cars alike. For example, you could reduce your premiums by selecting to pay a higher deductible or you could opt out of some insurance benefits like getting a rental car when your car is the shop. Think about how you could maintain your car value, be able to pay off your loan in case your car is totalled and avoid having to shell huge amounts of money on repairs or deductible, if you don’t like money surprises.

Length of use

How long will you use the car? Relocation aside, ask yourself if the car you’re buying today will be sufficient for you for years to come, especially if you’re financing it. If you think you will need a larger or better car within a couple of years, you may be better not going for an expensive new car, because you are likely to end up owing more than it is worth when it is time for you to upgrade.

Conversely, if you’re thinking you’re buying a car for the next five years or longer, find a car that is affordable and reliable — and you like it. This car is going to be part of your daily life for many years to come, so make sure you picky wisely, if you have the money to do so.

Finally, think of the resale value based on the length of use. While it is unlikely that you will make a killing on a car when you sell it, you will want to at least pay off any existing loan and walk away with some money.

— The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.