Buying a car is often the second biggest purchase most folks make after buying a house.
Cars in Singapore are the costliest in the world. So, the decision to purchase one must not be made in haste.
Making the wrong choices when buying a car will lead to a huge financial mistake. It can also result in the owner’s unending frustration with the vehicle.
Here are five car buying mistakes that you must avoid at all costs.
1) NOT THINKING AHEAD
Buying a car is a lot more complicated than say, buying a new iPhone. We are not discussing or comparing the costs of these two items.
What we are talking about are the costs incurred in the long run. Buying an expensive smartphone is a one-time payment. But with a car, you must consider its running costs.
If you are financing the purchase of your car, you must consider the monthly instalments.
Even if you paid for the car in full, there are various other expenses to consider. Road tax, insurance, parking fees, fuel and various other maintenance costs (such as unexpected repairs) are part and parcel of car ownership.
And while you might be able to buy a fancy sports car or luxury sedan, remember that these cars often incur substantial running costs. The key here is to not bite off more than you can chew.
2) RUSHING INTO A DEAL
We all know that buying a car can be an emotional experience, especially for enthusiasts.
But it is also important for you to make rational decisions. After all, this is not a minor purchase.
Every salesperson hopes to close a deal, and the faster they can do it, the better.
Some of them could even make the purchase seem so urgent. You may feel pressured and not have the time to think through your decision.
When presented with a good deal, it can be argued that you need to strike while the iron is hot. But are you sure that you aren’t being pushed into a bad decision?
Don’t be pressured into buying a car at a higher price than you budgeted for. What if the car turns out to be a lemon that eats away at your savings?
Always stay calm and manage your emotions when looking to buy a car. Do the necessary homework, especially for pre-owned cars. And avoid impulse decisions, which you might regret later.
3) DISMISSING OTHER OPTIONS
There’s nothing wrong with living life by your own rules. After all, it’s your hard-earned money that you will be spending.
But when buying a car, you should always keep an open mind.
For instance, brand snobbery might cause you to disregard models that are good and suited to your needs.
Or if you only insist on buying brand-new cars, you could miss the chance to buy a used car in mint condition – for a steal.
When faced with a substantial purchase, consider all available options.
4) FOCUSSING ON WANTS INSTEAD OF NEEDS
You may have strong desires for a Porsche 911. But is it really something that you can afford, especially in the long run?
More importantly, will such a car accommodate your family of five?
If you’re like most folks, you need reliable, efficient and practical family transport. Don’t stray from your main objective in buying a car. You’ll be more likely to make a prudent decision.
5) BUYING AT THE “WRONG” TIME
COE prices constantly fluctuate, making it impossible to accurately predict when they will go down.
However, you can still research and observe market trends. For instance, if COE has been trending low for a while, it could be a good time to buy a car.
Just watch out for upcoming motor shows or popular model launches. They could cause COE prices to suddenly spike.
If you buy a car when COE premiums are high, you could be in trouble later. Let’s say COE prices start dropping and for whatever reason, you need to sell your car.
Your car might end up being in negative equity. Negative equity occurs when the selling price of your car cannot cover the outstanding loan amount.
That’s not a good situation to be in. Remember, be prudent and make sure to think with your head, not your heart, when buying a car.