Jamaica National provides tips to consider when purchasing a vehicle and the hidden costs that are seldom noticed.

Rose Miller, manager of strategic empowerment programmes, JN Foundation, said primary to the decision to purchase a car is knowing one’s budget.

“When purchasing your car, knowing the price point for the unit your budget can accommodate is very important. A good place to start is to analyse your budget to see how much money you have left after you have taken care of all your current expenses. This would provide a good guide as to how much money you can afford to service a car loan,” she advised.

Miller pointed out that the cost associated with owning a car is significantly more than the price that one pays for it.

“There are other costs such as motor insurance, petrol, plus repairs and maintenance. And several others which might not be so obvious, these include taxes, registration and parking fees as well as toll, if you reside in an area where you have to travel via a toll road,” she explained.

“Then there are hidden costs, like that for interest, if you took a car loan; opportunity cost since the money used to finance the car, whether outright cash purchase or through a loan, is unavailable to invest to get a return; and, the often-forgotten cost of depreciation because the vehicle loses value over time,”

A need or a want?

She cautioned that it is important to consider all costs when budgeting for vehicle ownership to ensure you can afford not just the upfront expenses, but also the ongoing costs associated with maintaining and operating a vehicle.

Miller posits that an important question one should therefore ask oneself before purchasing a car is whether having a car is a need or a want.

“If you don’t need a car right away, you should wait it out as long as possible, opting rather to invest in an asset that will improve one’s financial security,” she said.

The JN Foundation strategic empowerment programmes manager advised that one should be strategic about financing the car once the decision is to proceed with the purchase.

“A good strategy is to take a car loan even if you can afford to purchase outright and instead

Invest your cash to work for you

“In this regard, shop around for the best investment option for your cash and the lowest rate to borrow to finance the car,” she suggested.

She also noted that first-time buyers navigating this market should take the time to do some research and speak with family and friends who have experience purchasing and operating motor vehicles.

“Part of ensuring that this purchase can fit comfortably into your budget is considering whether the vehicle should be new or used, a sedan or SUV,” she said.

Consider used over new

Miller also suggested that finding out whether anyone in your network is selling their used car, instead of going for a new one, is also an option worth pursuing as one might just get it cheaper. But, she said it is important that one knows and trusts the used car owner.

She further recommended that you ensure that the car is in good shape get a local mechanic, or a car-savvy family member to assess the vehicle before proceeding with the purchase.