Things to consider before getting your first car

By Danielle Lorenz in Money on August 17, 2009

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A car can put a big dent in your budget, as you must consider the costs of monthly payments, maintenance fees, fuel and insurance in addition to the initial purchase. Can you really afford this expense? The following are some things to consider if you’re thinking about getting a car.

New cars

A new car comes directly from a dealership, which means the suggested retail price is proposed by the manufacturer. You can usually choose what your car will look like, in terms of colour, interior and extra features, such as air conditioning and sound. But you must remember that added features raise the base price.

However, within the first few years after a car was made it will depreciate in value considerably, making it worth less if you ever want to sell it.

Buying vs. Leasing

If you buy a car it will be yours until either you choose to sell it or the day it dies. Most new grads do not have the kind of income to purchase a new car in full off the lot. As a result, they can put a certain percentage toward the cost of the car down, and then pay for the rest using a payment plan. This means by the time you have finished paying off your car, you will have paid more than it was initially worth due to the interest combined in your payments.

With a lease, you and the dealership make a deal where you get to keep the car for a certain length of time (months, years) and must be under a certain amount of kilometres. If you exceed this distance, then you must pay a fee on top of the payments associated with your lease. This happens more often than you would think.

Not quite new cars

Sometime in the summer the models for the following year are released. Dealerships will try to get rid of last year’s cars as fast as possible, as they are no longer worth as much as new ones. These models are considered as-is so you will not be able to add the extra features you want. A nearly-new car may also include floor models. These cars are technically new because they haven’t been owned, but would have some mileage from test driving.

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This article was written by Danielle Lorenz

Danielle Lorenz is the Editorial Assistant ("Eggtern") at TalentEgg. She has also been an Assistant Editor for the Career Incubator as well as a long-time contributer. She's a recent McMaster Alumna, having completed a second degree in English with a minor in Indigenous studies, and has previously completed a combined honours degree in Anthropology, and Cultural Studies and Critical Theory. She has been involved in numerous activities at Mac, including Welcome Week, the McMaster Students Union, the McMaster First Nations Student Association, and MacInsiders, an online news and information website for and run by McMaster students. This fall she will be embarking on a new journey at a new school, when she goes to Carleton University to begin her MA in Canadian Studies with a focus on Indigenous Studies.