Is it a good time to buy a new vehicle?

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As we enter what is traditionally one of the best times of the year to buy a new vehicle, it is difficult for the average person to know if the pandemic has created a real buying opportunity or launched a big one. stop sign.

Several trends have emerged. First, and not surprisingly, more people are interested in driving their own vehicles rather than using more public-focused transportation options. According to Automotive News, 93 percent are using their personal vehicles more than before the pandemic. And while not as nimble as having a pair of shoes delivered to your doorstep, trends in “distance shopping” of vehicles have emerged: digital showrooms, online setup tools, and road test drives. home, to name a few.

Now is the right time to buy? The deployment of new models at the end of the year and the desire of dealers to reduce stocks inflated by the pandemic could lead to downward pressure on vehicle prices. However, like the answer to similar timing questions, the real answer lies in your own situation.

Is it a need or a want? You may have heard the story of the customer who went bankrupt while purchasing items on sale. This uplifting tale didn’t resonate with my kids, but it’s worth considering when thinking about a potential vehicle purchase. With so much uncertainty I would fight the urge to get you some new wheels just because it looks like a good deal. In good times and bad, cars tend to depreciate.

Does it suit my budget? Obviously this is a question that will vary depending on your circumstances and if you are like millions of Americans you may have run into some financial trouble in 2020. If your job situation is strong and you can cap all your 10% transport costs. of your gross income, you should be on the right track. This includes gas, maintenance, insurance and more. It’s probably a lot less than many spend, but my goal is for you to have less financial stress and more flexibility, especially today.

Can I get a competitive interest rate loan? Over the years, I have met a lot of people with double digit auto loans. It may have been reasonable in 1985, but it is not acceptable in today’s extremely low interest rate environment. This is especially true with all of the manufacturer financing offers available today. If your credit history prevents you from qualifying for anything other than this type of loan, you should only purchase simple transportation while you work to increase your score.

How long will I pay? Remember, the longer the term of your loan, the more interest you earn and the more likely you are to be topsy-turvy. Yes, that means that the eight-year loan you’re considering to squeeze too much car into your budget is a bad idea, even if it’s low or no interest. Opt for a loan of five years or less.

Does this vehicle suit my lifestyle? Earlier this year – and luckily we didn’t pull the trigger – my wife told me she was ready to replace her SUV with a new sports coupe. In the next half hour, we were discussing our plans to pick up our grandchildren and all their stuff for a weekend with us. There is only room for one coupe in this house, and it is my paid vehicle. Point? Buy something that you can drive for an extended period of time, not something that you will soon regret.

So, to end with an answer to the question we started with: a new car can be a good idea, but only if it makes sense in the context of everything that’s going on in your life and your finances.

JJ Montanaro is a Certified Financial Planner with the USAA, the American Legion’s Preferred Financial Services Provider. Submit questions online.


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