Planning to buy a car this year? Keep these points in mind

The new year often heralds the start of new beginnings for most of us. This is the time when we all make resolutions, embarking on a new journey. A number of us plan to start eating healthy, while some (or most) of us take gym memberships to get into shape. This is also the period when people wish to welcome new members in their family, in the form of cars or bikes. Car dealerships are packed towards the end of December and start of January, with people going on test drives to bring home their favourite ride.

Now, unlike gym memberships or changes in diet, buying a car is expensive, with most of us availing car loans for the same. Given the fact that buying is car is an aspiration most Indians harbour, it is imperative that we remember a few points to get the best out of our money. So if you are looking to bring home a new (or used car) this year, you might as well keep these 5 points in mind.

• Take a test drive – This is a step most people do not take very seriously. It is absolutely imperative to take a test drive of the car and run it through different scenarios. Just taking the car for a drive around the block will not help. Take a long test drive and push the car to its limits. Check factors like the handling, braking, visibility factor, etc.
• Don’t be impulsive – Sales executives are designed to convince people, and some of them might do such a good job of convincing you that you might end up making an impulsive decision to buy the car. This is perhaps the biggest mistake anyone can commit when it comes to buying cars. It is always a good idea to take some time, reflect on the options and then make a commitment. Remember that this is a long-term investment and is not a piece of clothing for you to swipe your credit card without thinking twice.
• Check your budget – Buying a car is not cheap. Most of us save for years to purchase it. A number of us use our Fixed Deposit maturity amount to pay for it, while others might buy a car after receiving a bonus. Regardless of our position in life, it is important to find a car which suits our budget. A number of us think that it’s OK to buy an expensive car, thinking that a car loan will be of great utility. While a good car loan can help you buy your car, it might not be the best option to exceed your budget.
• Compare loan options – So you found your dream car and it is within your budget, but you do not have the complete amount. This is the time when a car loan comes in handy. There are a number of insurance companies in India offering motor loans and it is a smart option to compare the car loanoptions available. Doing this can help you get a higher loan amount at a cheaper interest rate.
• Plan your EMI payments – Once you have narrowed down on a car and the car loan, take some time to compute your car loan EMI liability.  You could use car loan EMI calculators for the same, with these calculators breaking down the entire loan amount. Ensure that you do not have other financial commitments like paying home loan EMIs/personal loan EMIs which could strain your finances. In case you do have any obligations, ensure that you don’t pay more than 40% of your salary on EMIs.
• Insure your car – This is something which is not on our minds in most cases. It is imperative that you do not forget to purchase a good car insurance policy for your beloved vehicle. While most new cars will be insured (the cost of insurance is included in the final price), do remember to renew the insurance. Failing to do so could cause great inconvenience in case of an accident, in addition to attracting a penalty for driving the car without a valid insurance policy.Assess your needs – Ask yourself why you need a car before you go out there and buy one. Will you be using it for long drives on a daily basis or is it for short city commutes? How many members would be seated in your car and who would be driving it? Are you comfortable with a manual transmission? These are just a few questions you need to ask yourself, for the answer to these typically narrows down your search.A diesel car, while more expensive to buy, makes sense if one travels long distances each day. Conversely, one can choose a petrol car if the distance travelled in minimal. Additionally, for large families an SUV/sedan would be a smarter option when compared to a hatchback. A car is more than a means of transport in our country, it is an achievement for millions. While nothing could dampen the feeling of buying a new car, remembering these simple steps could make the entire process a tad bit sweeter.