Times have changed for the buyers who made the Mustang so hot back in the 1960s.
The kids are grown, and the lure of a shiny new car is very strong, but there are things to think about before you buy. Here are 5 tips for Baby Boomers about to buy their next car.
Consider Cash Flow
You’ve worked hard and deserve that retirement, but it does change your cash flow. If you’ve got a lot tucked away, then it may be tempting to put down a large deposit or even pay for the car in full.
But, be careful. Don’t dip into money that you saved for retirement, and don’t leave yourself without a cushion in case something unexpected leaves you in need of that cash. A monthly payment is more in the long run, but it keeps your cash free for emergencies.
Where Else Could You Put That Money?
Another consideration in the cash versus loan equation is how much your money could make elsewhere. Even if you have the cash and can comfortably spend it, that only makes sense if you are saving more on interest than you would be if you invested that money someplace else.
Depending on the price of the car, it might not make sense to pay up front.
You might want a new car, but it might not be the choice for your finances. A used car means someone else took the depreciation hit and that saves you money.
Today’s used or pre-owned cars also come with warranties that remove the fear over maintenance costs. You’l pay less for a used version of the car you want than for the new one sitting on the lot and can still drive away happy.
Check Your Car Insurance
A portion of car insurance is based on how much you drive, and chances are you aren’t driving as much as you did years ago. This can reduce the cost of your insurance and free up money to use for your car payment.
Check with your insurer before you buy and make sure you’re not paying for miles you don’t even drive anymore.
Consider a Lease
If you’re driving less, then this is a good time to lease a car, especially if you like the idea of having a new car every few years. Your down payment and monthly payment will likely be lower than buying, which could get you into a more expensive car than if you bought a car.
Buying a car is almost always cheaper in the long run, but leasing makes sense if you aren’t looking to build equity and want another new car in a few years.