Buying Your Second Car - What to pick and how to pay for it
Its time for a new car
Buying a car is a huge step for a person getting their first car. It smacks of independence, of having a choice of when to go and where to go, of announcing to the world at large that you have arrived!
The excitement of buying your first car can never match the excitement of merely upgrading to a better car. Still it is when you are buying your second car that you need to do a lot more soul searching and research.For one thing, its no longer merely you who will be using the car, its going to be needed by your family as well. The Ambassador was the old preferred Family Car in India for many decades before the market opened up to Marutis and the little Maruti Suzuki 800 took over the Indian roads.
It helped that the little Maruti was more suited for the new nuclear family which was evolving in modern middle class India. The Ambassador was my Grandfather's Car while the Maruti 800 was my Father's Car. It was the little car that I learnt to drive on and it had always held a cherished place in my heart. My father did upgrade later to an Esteem from Maruti and while it was a sedan with a lot more power, it was not what my husband and I were looking for.
Our first car was the Maruti Suzuki WagonR. It was a new offering from Maruti and while it was a small car the hatchback had the kind of space that we would need on our periodic travels on highways. Not too many people were pleased with the WagonR at that point of time, some calling it a bread box and others a bedroom(all seats could be arranged to form two passable beds inside the car.) It sure proved its critics wrong and the little car with a valiant heart has been a wonderful choice for us over the last decade.
Now its time to move on...its time to upgrade to a bigger and better car. The growing family size demands it. So what are we thinking of buying next? It actually depends on a number of factors which I will be detailing below.
What's Your Pick?
What kind of car do you want?
What is the utility of the car going to be?
What kind of car you buy will depend on what you intend to use the car for. A sedan, a hatchback, a multi terrain vehicle or a sports utility vehicle, what is it that you really need? This means you need to answer a few questions -
1. Is it a car that will replace your current car ? or will it be in addition to the one you already have?
2. Is the car going to be used to drive a round a lot picking up and dropping kids to and from their various activities? Pick a car with a decent mileage.
3. Is the car going to be used for sporting activities? Camping, cross country traveling and all will need a sturdy four wheel drive with plenty of storage space.
4. Is the car likely to be replaced soon or will you continue with it for the next decade or so? If you plan on keeping it you may want to go in for a new one rather than a used car.
Picking the right model
Each car manufacturer has a number of options for you to pick and choose from. Once you have decided on exactly what the car is to be used for you need to pick a make and manufacturer. Now its easy to get confused here because each type of car has a number of different models to offer.
The lower end model and highest end model can actually have such a vast difference in price that you may begin to wonder if they really are the same car. What brings about this difference is a number of subtle changes to the interiors and features offered in each of these differently priced models.
These features can include power steering, power windows, AC availability, airbags, music system, hub caps and a whole lot more. Some features can be added on to the car at a later date when you have money to spare, so these can be skipped when picking a model.
Did you take a loan to buy your first car?
What is your budget?
Once you know what you want the car to do for you the most important factor is the budget. Just how much can you afford to spend on a new car? Are you going to take out a car loan, or do you want to pick up something that you can make a down payment on?
If you are hoping to buy a new car there is a good chance that you will want to take on a loan. If so, consider the EMI or monthly repayment capacity that you have. A loan will be easier to repay on a lower EMI with a higher interest rate for some, but to others a shorter loan rate with lump sum payments may make more sense.
Selling your old car to get some cash for the deposit is also a good idea. In case you are buying a car from the same manufacturer as the car you already own, you can even strike up a good deal on an exchange offer. Get the car evaluated by an independent third party as well, so that you know what the going rate for your vehicle would be.
There are a number of factors which can influence your budget and the financing options that you have. Here are some factors to consider.
1. Are you buying a new car or a used one? A brand new car will be more expensive while you may be able to finance a used car easily on your own.
2. Are you exchanging your old car for a new one? The exchange value of the old car can considerably reduce the cost of the new car for you.
3. Are you getting a loan? This can be a tricky issue for those of you who have a bad credit rating. Getting a loan approved is fairly easy if you work in some company but can be really painful if you are self employed.
4. Have you got any money set aside as savings which can be used to reduce the loan amount? Rather than pay higher EMIs it may just be worthwhile breaking that FD.
In my case we will be upgrading our present car to a new bigger model. Our family size has increased since we bought this car and we need more space. Also we tend to drive long distances on holidays and that means more space and more power needed.
Since we don't change our cars frequently we will be buying a new car so that we can run with it for the next decade or so before we have to think about replacing it. A used car may have some nasty surprise for us which we do not want to risk.
We will be taking a loan out for the car but not for the whole amount. There are some savings that we will use to reduce the principal amount of the loan. It will be a long term loan for over 6 years so that the EMI is not too high for us to manage.
Initially we were arguing over whether to continue with a Maruti Suzuki car or to try out a different manufacturer like Toyoto, Honda,Tata Motors or Mahindra. We skipped manufacturers who do not have a wide service network as we tend to live in a number of different places all over the country.
Eventually we decided to stick with Maruti and picked up the Swift Dzire sedan.