Buying a car can be exciting, but it’s also a significant financial decision. Whether it’s your first car or an upgrade, making the right choice needs planning and patience. This guide will explain what to do, what to avoid when to buy, and how to handle stress if you’re not financially stable. We’ll also include lessons from Robert Kiyosaki’s Rich Dad Poor Dad to help you make better financial decisions.
What to Do When Buying a Car
1. Know What You Need
Before going to a dealership, think about why you need a car. Is it for daily commuting, long trips, or occasional use? Knowing this helps you pick the right type of car and avoid overspending on unnecessary features.
2. Set a Budget
Decide how much you can afford to spend. A good rule is to keep all car costs (loan payments, insurance, fuel, and maintenance) under 15% of your monthly income.
Rich Dad Rule: Avoid Liabilities You Can’t Afford
Kiyosaki explains that a liability takes money out of your pocket. It’s a liability unless you use a car to make money (like for ridesharing). Spend wisely.
3. Check Your Credit Score
Your credit score affects your loan interest rate. A better score can save you a lot of money. Check your score before shopping and try to improve it if needed.
4. Research Online
Use websites like Kelley Blue Book, Edmunds, or AutoTrader to compare car models, prices, and features. Read reviews to avoid cars with everyday problems.
5. Consider Used Cars
Used cars can save you money while still being reliable. Look for certified pre-owned (CPO) cars from trusted dealerships. These cars often come with warranties and inspections.
6. Find the Best Financing
Don’t rely only on dealership financing. Check banks, credit unions, and online lenders to get the best interest rates. Getting pre-approved gives you more power to negotiate.
7. Negotiate the Price
Car prices are negotiable. Research the car’s fair market value and use that knowledge to negotiate confidently. Be firm but polite.
8. Inspect and Test Drive
If you’re buying a used car, have a mechanic inspect it first. Always test drive the car to make sure it’s comfortable and meets your needs.
What to Avoid When Buying a Car
1. Skipping Research
Going to a dealership without research puts you at a disadvantage. Salespeople might upsell you. Know the car’s value and available deals in advance.
2. Focusing Only on Monthly Payments
Don’t just look at the monthly payment. Consider the total cost, including interest, insurance, taxes, and maintenance.
Rich Dad Rule: Think Long-Term
Kiyosaki suggests thinking about the future. Don’t let short-term convenience cause financial problems later.
3. Buying New If You Can’t Afford It
New cars lose value quickly—up to 20% in the first year. If you’re not financially stable, a used car is a better choice.
4. Rushing the Purchase
Impulse buying can lead to regret. Take your time to compare options and read the fine print on financing and warranties.
5. Ignoring Insurance Costs
Some cars are more expensive to insure due to repair costs or theft rates. Get insurance quotes for the cars you’re considering.
When to Buy a Car
1. End of the Month or Quarter
Dealerships try to meet sales quotas at the end of the month or quarter. This is a great time to get discounts or deals.
2. During Holiday Sales
Major holidays like Black Friday or Boxing Day often come with special promotions and rebates.
3. When You’re Financially Stable
If you’re struggling financially, wait until you’ve saved enough and your finances are steady.
4. In the Off-Season
Car sales are slower in the winter, so dealerships may offer better deals. Late summer is also a good time as they clear out older models.
When NOT to Buy a Car
1. During a Financial Crisis
If you’re struggling to pay bills, adding car expenses will only increase your stress. Focus on improving your finances first.
2. At the Start of a New Model Year
New cars are priced higher when first released. Wait a few months or look for discounts on the older models.
3. Without Comparing Options
Don’t settle for the first car or loan you find. Comparing options can save you a lot of money.
Managing Stress If You’re Not Financially Stable
Buying a car while financially unstable can be stressful. Payments, maintenance, and unexpected repairs can stretch your budget. Here are some tips:
- Wait Until You’re Ready: Delay the purchase until your finances improve.
- Use Alternatives: Rely on public transport, carpooling, or ridesharing for now.
- Set a Budget: If you need a car, buy a reliable used one within your budget.
- Have an Emergency Fund: Save for unexpected costs like repairs.
- Seek Advice: Talk to a financial advisor or trusted friend for guidance.
Rich Dad Rule: Build Assets First
Kiyosaki says to focus on growing your wealth before taking on liabilities. Save and invest before making big purchases like a car.
Conclusion
Buying a car is a big decision that needs planning and financial discipline. You can make a smart purchase by understanding your needs, setting a budget, and avoiding common mistakes. It’s okay to wait until you’re financially ready—your peace of mind is worth more than any car. Follow lessons from Rich Dad Poor Dad to make better financial choices and avoid turning your car into a burden.
Frequently Asked Questions (FAQs)
1. Should I buy a new or used car?
Buying a used car is usually cheaper, especially if you’re on a budget. New cars lose value quickly, while used cars have already depreciated.
2. How much should I spend on a car?
Try to keep all car costs under 15% of your monthly income, including payments, insurance, and maintenance.
3. Can I buy a car with bad credit?
Yes, but you’ll likely pay higher interest rates. Work on improving your credit score or look for lenders that specialize in bad credit loans.
4. When is the best time to buy a car?
The end of the month or quarter, holiday sales, and late in the year are good times to find deals.
5. What if I can’t afford a car now?
Use alternatives like public transport or carpooling. Focus on saving money and improving your financial situation before buying a car.
