Published on March 24, 2014 | by David D'Orazio Photography by http://approvedauto.wordpress.com/0
The New Car Dilemma
More often than not, the first big purchase a newly graduated student will make is a new car.
It’s a big step towards building financial independence after relying on financial aid, but is buying new a student’s best option?
The three most common choices are buying new, buying used, or leasing. Each has its pros and cons.
Curtis Biggs, general sales manager at Mazda of Brampton, recommends that a new graduate lease their first car.
“First off, leases are far more economical and students have the option to buy their car at the end of the lease or just return it.”
Leasing provides students the flexibility of more choices in their financial range. They get a brand new car, and the monthly payment is much lower on a lease, Biggs said.
Buying new, whether that’s paying in full or getting a loan, enables the student to own their car outright. This allows students the freedom to modify their car without incurring extra fees or returning it at the end of the payment term.
Biggs also said it can be easy for an inexperienced buyer to get lost in the details of buying new with things like financing terms and interest rates. Contrary to what advertisements often broadcast, there isn’t an urgency or best time to buy a car.
“The best time to buy a car is when you are financially ready. There is no “best time” to buy. Deals are usually always there, but affordability is the most important thing.”
Salespeople will probably try and get the most out of you regardless if it’s in the student’s best interest, Biggs added.
“Sales have always been based on selling, and salespeople will try to sell you things that you probably do not need, so make sure to ask a lot of questions and expect the normal ‘back and forth’ process,” he said.
Justin Astraatmadja graduated from Sheridan College when he was 20. He chose to buy a three-year-old Audi A4 from a dealer instead of leasing or buying new.
His decision was based on his circumstances, he said.
“It was around the time that I had just started at my new job. I was six months in, had passed the probationary period and felt I had enough job security to make a slightly lavish purchase.”
Astraatmadja said he financed his first car, meaning he got a loan to buy it.
“I wasn’t sure where my job was going to take me. If I had to move downtown for example, I would want to be able to sell the car right away instead of ending the lease early and paying penalties.”
Even as a car owner who opted for luxury, Astraatmadja said that getting a car isn’t something students should rush into.
“At that age, you should be saving as much as possible — when owning a car, you tend to lose a lot of money, making it harder to save. A vehicle is not an asset, it’s a liability, and is the cost of our need to travel on our own terms without the use of public transit,” Astraatmadja said.
Biggs, as general sales manager at a large dealership, agrees that students shouldn’t rush into anything.
“Do online research. There is a lot of information,” he said.
“The best deal is when you are sure about what you are paying for, and doing your due diligence will help a great deal.”
“The most important thing is need assessment for long term. Do you really need a car right now?”
For those graduated students whose answer is yes, continuing to do some homework will only benefit them in the long run.