Is it Worth it to Buy a New Car Right Now?
I am sure that you’ve seen the commercials or even seen it online: Auto Sales Companies are offering to help us get into a new or used vehicle quickly during this crazy time. They are doing this by offering things like, 90 days deferred payments, free ship to home, 60 or 84 month extended loans, and some are even offering 0.0% Interest payments.
But are these great deals, really?
At Graham Auto Repair we have a few questions that we suggest for you to consider before deciding if right now is, “the right time” to purchase a new vehicle for yourself or for your family. Click on the link to watch the YouTube Video on our YouTube Channel.
1. Were you already in the market for a new vehicle?
If your immediate answer is, “Well no, but… it would be nice to have a new vehicle with these deals!” then I would like to caution you to take a step back. Continue through the rest of the questions and at the end of the Blog we will share with you a True Cost of Car Comparison Chart to help you decide.
2. Do you already have a good working vehicle?
I mean sure, it is NICE to have new things. Right now especially, we can’t get out of the house to do fun things; why NOT get a new vehicle right now? Once we’re finally able to get out of our houses again, it would be awesome to get out there on the open road in a new car. We all love that new car smell (well, most of us do) and being in a nice, new, clean car – it just feels good!
On top of that, if your current vehicle has a lot of maintenance or repair charges that you’re anticipating soon, it can sound really nice to hear that you could get a new vehicle without any costs to you over the next 3 or more months.
But the real question that we’re all hoping to answer is this: “Will it really save me money in the long run if I buy a new vehicle now instead of doing the repairs on my current vehicle?” If you have this question then I encourage you to keep reading, and check-out the True Cost of Car Comparison Chart at the end to help you answer this question yourself.
3. Is it Financially Responsible to Buy a Car Right Now?
Let’s be honest, it’s risky. None of us know how much longer we’re going to be in this current situation. Sure, we’re not spending our money on some of the things that we were before. We’re not eating out, we’re not walking through the shopping mall and making purchases that we don’t necessarily need, we’re not going out to entertainment venues like the movies, we’ve canceled all of our upcoming travel plans, and some of us aren’t spending as much money on gas because we’re not doing our normal driving routines anymore.
You may start noticing that your savings account has more money in it than you expected it to right now. Or maybe you’re anticipating money that you have coming soon, and you’re thinking, “I know how to put that money to good use!”
But don’t forget: we’re still at the beginning of all of this – if this goes on longer than we anticipate it to, we may end up relying on our savings account to get us through these uncertain times. Making large purchases right now may not be the best idea since we don’t know what things will be like 3 or 4 months down the road. Sure, the payments are being deferred for 3 months, but what will that car payment look like once that deferment has ended? None of us know what things will look like 3 months for now. Even if we are back to some sort of “normal” 3 months from now, we may not be ready for an added expense to our monthly bills as soon as we start to get back on our feet again. It’s certainly something to consider.
4. Is a new vehicle the way you want to spend your money?
With so many things closed off to us right now, purchasing a new vehicle may scratch that itch, the one that’s telling you that you that you really want to do something fun, right now. But is that really the way that you want to spend your money? For everyone this answer is going to be different. If a new vehicle is in your immediate future because you need one, the answer may be yes for you. But if you’re only looking at buying a new vehicle because this sounds like a really good deal and you want to do something fun, the answer may be no. You may want to consider saving your money to use for something fun for you or your family once we’re finally able to get out of our houses. Maybe you’ll want to take your family out to dinner, go to the movies, or start saving up money for that next big family vacation once we’re finally able to travel again.
The point is to make sure that, if you’re undertaking the purchase of a new vehicle, you’re taking into consideration how that purchase is going to affect you financially down the road. One way that we want to help you do this is by sharing with you a True Cost of Car Comparison Chart.
True Cost of Car Comparison Chart:
Let’s talk about the True Cost of Car Comparison Chart for a moment. If you go online to Google and input “Edmunds.com True Cost to Own” in the search bar, select the website that shows “Cost of Car Ownership – 5-year Cost Calculator.” Here is a link: https://www.edmunds.com/tco.html
Basically you can use this website the calculate the total cost of owning a vehicle. It includes things estimates for: Insurance cost, Maintenance and Repair costs, Taxes, Fees, Interest when Financing, Depreciation costs and Fuel costs. It breaks this down into a 5-year chart, which is the same amount of time as a 60-month Car Loan, to show you an estimation of what you will pay on your new car during that time period. I’m going to show you an example using a 2019 Chevy Impala, 4 cylinder 4-door Sedan. On their webpage not only can you input the Make, Model, Year and Style of vehicle that you’re looking for, but you can also input your zip code to give more accurate examples for the area where you live. For our example I am going to input 98338 which is our zip code here in Graham, WA.
You can read on their website details of how they calculated all of these costs. For example, they use assumptions such as that you will be using a 60-month loan, that you will drive an average of 15,000 miles per year, that you are financing the vehicle and not leasing it, that you have an above-average credit rating and are putting down a 10% down payment on your vehicle. If any of these things differ for you, for example if you do not put a down payment, your credit rating is higher or lower, you do a longer or shorter loan period, or if you drive more or less than 15,000 miles per year – this will either make your actual costs higher or lower, depending on your changes.
So let’s take a look at our example of a 2019 Chevy Impala over a 5-year period of time.
It's important to understand that this Chart only includes the Total Costs of Owning the Vehicle for 5 Years. That doesn't include the Cost of Purchasing the Vehicle. You have to add those two costs together.
Total 5-Year Cost: $42,522
Total Cash Price: $28,656
Total Cost: $71,178
Now that we’ve looked at the estimated total cost of purchasing a new vehicle over a 5-year time period, let’s discuss what that means compared with your current situation. If you already have a working vehicle that’s been paid off, you’re golden. You’ve already been through the trenches of paying the big bucks for your vehicle – or even better, maybe you purchased your vehicle used, avoiding some of the depreciation costs; and maybe you’ve been able to avoid even more of those costs by purchasing it outright with cash instead of paying the interest and fees that are associated with using a loan. Great!
Vehicle Health Inspection
If you’re worried about the upcoming costs that you have due to impending maintenance and repair costs on your current vehicle, remember that all vehicles have regular maintenance costs, and all vehicles will eventually have repairs, even new ones. Buying a new vehicle doesn’t eliminate repair costs, it just post-pones them.
At Graham Auto Repair we can help you decide if it’s worth it for you to continue maintaining your current vehicle vs. purchasing a brand new one. When you come in for a regular Service, such as an Oil Change, our Technicians will perform a Free Vehicle Health Inspection. Or if you don’t have any upcoming Services with us but you would still like to have a Vehicle Health Inspection, give us a call. Let our Service Advisor know exactly what you’re looking for and they can schedule you an appointment. Our Technicians will go over your vehicle and give you a printed report that will show you all of the suggested maintenance and repairs that your vehicle needs, in order of importance, along with estimated costs. And if you’re considering the purchase of a used vehicle and you want to know the health of that vehicle, we can perform a Pre-Purchase Vehicle Health Inspectionas well. Just give us a call and our Service Advisor will let you know the costs of these Services.
All in all we hope that this Blog has helped you make an informed decision about the possibility of purchasing a new vehicle. We want to make sure that none of our customers are being sucked in by the hype or excitement of purchasing a new vehicle if right now just isn’t the right time. And if right now is the right time for you, we hope that this vehicle helped you as well. Stay home and stay safe everyone.
Remember, if you need any essential services on your vehicle right now, we are here for you. You can set up your appointment over the phone by calling 253-847-2221 or on our website at www.GrahamAutoRepair.com. We have contactless services available for you, like paying over the phone, dropping off your vehicle using the key drop-box, or courtesy vehicle pick-up and drop-off. Check out our Blog Post, "Health and Safety Update" to read the steps we are taking to ensure the safety of our Team and our Customers.
We look forward to serving you and talking with you soon.
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