So you just graduated college, got your first job (if you are one of the lucky ones), and need a car. When it comes to getting a car for the “real world,” there are several factors you need to consider, including whether to buy a new or used car? I recently found myself in this situation as a fresh college graduate. The following are a few helpful tips I came up with from my experiences.
The Budget: The first point of concern is your budget. While you may want a brand new BMW, it is probably not in your post-grad budget. Now, it is unrealistic to say that your budget will not change. Obviously you would be willing to pay a higher price for a more reliable car you know, a newer car than a 1990 Oldsmobile. The point of making a budget is to understand your assets and liabilities. Assets are those things that have value. You bank account, CD’s or investments you have, which are fairly liquid, and anything you are expecting to sell in the near future are all good things to include. Liabilities, on the other hand, are those things that you owe. These could be credit card bills, utility bills, any debts owed to your parents, etc. Add all of these together to get positive values for assets and negative values for liabilities. Don’t forget to include any expected gifts from family members for graduation. It is also important to take into consideration how much of a loan, from parents or from a bank, you are willing to take. Calculate a monthly payment that you would be comfortable making that also has your car paid off in a time line you are comfortable with. This will give you an estimated amount of cash you could have on hand to make a car purchase. It is also important to write down any expected costs coming up in the near future. With a new job, there is a good chance you are moving to a new place. Moving involves a lot of expenses, and, even if your new company is paying for your move, there will normally be unexpected expenses that you will need to cover. With all these factors in mind, you should have an adequate idea of how much you could possibly pay for a car.
The Search: First, it is important to make a list of what you are looking for in a car. Making a list ahead of time will narrow your focus when it comes to actually looking at cars in person. Your list could include anything that you know you really want in a car, and, also, those things you really don’t want in a car. Then move to the internet, searching reviews, such as consumer reports, and other reputable sources will further narrow the makes, models, and features you are looking for in a car. Consumer Reports is an extremely useful tool because it gives ratings on many important factors of a car as well as reviews on older models of cars. Personally, I wanted a car that would last me 10 years, would be reliable, and would be fun to drive. I did not focus much on the color, features, or appearance of the car because those were not a high of a priority for me. I wanted to find value in a car purchase, but I also wanted a car that was fun to drive. Each person is different, so make sure you take the time to find what is important to you. At this point in life, most people have had the opportunity to drive a numerous cars for different reasons, so use those experiences to guide your car search.
In the next blog post, I will explain the most exciting parts of the car searching process: test driving and making the final decision.
Financially Stephen grew up in a family that preached saving and living below your means. That, in part, translated to his interest in Economics, especially how economics can affect individuals’ financial lives. Through his financial markets class in the fall of 2011, he furthered this interest by analyzing macroeconomic events. Stephen believes that finance, personal finance in particular, is a subject severely left out when it comes to public schooling in this country, and it is a problem that has manifested itself and contributed to many of the problems seen today. He also believes that education is the key to improvement and hopes that through his writings he will be able help people learn about finance, macroeconomics, and how to be financially savvy for the future.
In his free time Stephen enjoys playing and watching sports, wakeboarding, sailing, and country music. At UNC he has participated in Strive for College, UNC Dance Marathon, and UNC Relay for Life.