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Car Ownership

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Other than real estate, buying a car may be one of the more expensive purchases you make. Seeing how the car fits into your financial plan is an important step. Before jumping into a big-expense item, it's important to assess what you prioritize and your financing options. 

First things, first: how do you plan on paying for your car? Lease or Buy? 

Leasing generally gives you the use of a new car over a limited period of time for a relatively small monthly payment. But over the long haul, leasing tends to cost significantly more than outright ownership in many cases. Make sure your lease realistically anticipates the number of miles you expect to drive during the term of the lease. Excess mileage charges can raise the final cost of the lease significantly.

Buying may require a larger down payment and a higher monthly outlay up front, if you plan to finance your car. But the payments generally end while the car is still usable, potentially offering many additional years of service. As a result, buying tends to be significantly less expensive over time if you hold on to the car and drive it to the limits of its useful service life.

After financing, you should consider other factors in relation to your car: 

Potential yearly fuel cost:  In a world of high fuel prices, a car that gets 40 miles per gallon on the highway could save thousands per year over an SUV that gets 20 miles per gallon. Hybrid and clean diesel models often burn less fuel than their conventional counterparts, but they may also cost more up front.

Consider how frequently you might need to drive in mud, sand and snow. All-wheel drive and four-wheel drive systems are popular but potentially costly features. If you don't live in areas with significant snowfall and don't drive on dirt roads, you may not benefit much from these systems.

Collision mitigation braking, adaptive cruise control, cross-traffic and lane-departure warning, and blind-spot monitoring can warn of hazards and even sometimes apply the brakes automatically in an emergency. The Insurance Institute for Highway Safety's list of top safety picks offers a list of cars with active front crash prevention systems.

Good luck with your car search, hope this helps! 

Source: Financial Planning Association 

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