12 Signs That It Might Not Be the Right Time To Purchase a Car
Written by
Jordan Rosenfeld
Edited by
Ashleigh Ray
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
There may be few things sweeter than a new ride, with a sparking interior, exciting new features and a body free of wear and tear.
Buying a new car may be exciting, but it’s also costly, and in many cases adds to debt burdens and increases overall financial responsibilities, so it should be done thoughtfully and with the right timing.
Experts suggest 12 signs that it might not be the right time to purchase a car.
Financial Instability
“Purchasing a new car can be tempting,” said Frank De Mulder, founder of Classic Car Maintenance. He understands the allure of the latest features, particularly when a car is in pristine condition, and the option of financing can make it seem like a great idea.
However, if you are currently facing financial uncertainties or instability, it might not be the best time to commit to a car loan, he said, because “a car purchase involves not just the cost of the car itself, but also insurance, maintenance, and fuel. Ensure that your financial situation is stable enough to handle these additional expenses.”
High Interest Rates
With the Fed raising the interest rates this past year, getting a car loan is becoming increasingly expensive, De Mulder said.
“The Fed is signaling that it is slowing down the rate hikes, which means the interest rates are now at or close to their highest point. It would be wise to postpone any loans until the rates are lower again. This might save you thousands of dollars,” he said.
Impending Major Life Changes
If you are anticipating major life changes such as relocating to a different city or country, changing jobs, or expanding your family, it might be wise to wait until your situation stabilizes before making a car purchase, De Mulder suggested.
Current Car Is Still in Good Condition
New cars (even new-to-you) have a way of seeming better than the one you’re currently driving, but is it really necessary to buy one?
De Mulder said, “If your current vehicle is still in good working condition and meets your needs, it might be more economical to continue using it rather than investing in a new car.”
Market Conditions
Supply and demand as well as other factors in the automotive market make car prices fluctuate. Right now, prices of new cars are very high compared to a few years ago, De Mulder explained, who suggested, “It might be more beneficial to wait for market conditions to stabilize before making a purchase. “
Upcoming Model Releases
If you really are in a position to purchase a new car, keep in mind that car manufacturers regularly release new models or updated versions of existing models, De Mulder said.
“If a new model of the car you are interested in is set to be released soon, it might be worth waiting to either purchase the latest model or take advantage of price reductions on the current model.”
Lack of Research
A car is a significant investment, and it’s crucial to conduct thorough research before making a purchase, De Mulder insisted. “If you haven’t had the time to research different models, compare prices, and read reviews, it might be better to wait until you are more informed,” he said.
Insurmountable Insurance Premiums
John Lin, an auto mechanic and owner of JB Motor Works, said you need to think about how the cost of insurance will affect your overall financial burden. “If adding a new car to your insurance policy will make your premium skyrocket, think twice about buying,” he said.
Additionally, he said, “Always remember, the shine of a new car will fade, but the financial commitment sticks around.”
Poor Credit Score
If your credit score is low, you may face higher interest rates and less favorable financing terms, said Stanley Hawkin, automotive expert with Vehicle Chef. “[Poor credit] is a sign that it might be wiser to improve your credit before making a purchase.”
Existing Debt Burden
Additionally, if you already have significant debts, adding a car loan can increase your debt burden, Hawkin said. “It’s advisable to address existing debts before taking on new financial obligations.”
Limited Down Payment
While not all car purchases require a down payment, not having one can lead to higher monthly payments and potentially underwater loan balances, Hawkin said. He recommended, “Save for a substantial down payment to reduce the financial impact.”
Rapid Depreciation
New cars depreciate quickly, so if you plan to sell the car shortly after purchase, you may face a significant loss in value, Hawkin pointed out. If that’s the case, you should reconsider your decision.
When it comes to making big new purchases, always take your time, do your research and consider the long-term financial implications.
More From GOBankingRates
