9 MONEY-WISE TIPS FOR FIRST TIME CAR BUYERS

This isn't a car blog though, so I can't give tips on engine specs, performance, parts etc. The best I can give are cost and maintenance tips. And I'm not experienced enough to give advice on buying second-hand cars either, so this post is mostly about buying a new, first-hand car.

1. Choose your car wisely.

I'm a firm believer in paying for value. Unfortunately, because cars are so expensive, it's naturally associated or appraised as much for the perceived social status it brings, and not necessarily the real role it will play in your daily life - which is mainly as just a point-A-to-point-B means of transportation.

I once heard a presidential candidate gloss over having a Volvo as a need because that level of "security" is needed for his position. If the car came out of the factory with bullet-proof chassis and self-inflating tires, I'd readily agree. But he was probably referring mostly to the dependability and reliability of the car. I can't knock the quality of Volvos, but obviously they also don't have a monopoly on great car performance.

I also often hear people citing safety as the main reason for buying a big, expensive, gas-guzzling SUV. It certainly feels safe to be inside such a big sturdy vehicle. But defensive (and level-headed) driving is still the best way to avoid getting in an accident. Besides, there are other vehicles just as big or bigger than SUVs, so being in a big car doesn't mean much. And a high-speed collision, even with a smaller car, hardly excludes a bad outcome. SUVs aren't really that much safer.

I'm not knocking Volvo or SUVs. If you need one, get one. Just be sure you know what you really need. Even if you can afford a more expensive car, there may be very little additional value you are getting back in return.

2. Choose your dealer.

Even when buying the same exact car, different dealers can sometimes offer different prices. Find one willing to give you discounts or freebies. Sometimes no one can really do so; but it's very much worth the try.

How to try? Just ask point-blank. If they say none, say you'll think about it and then talk to other dealers. You can also try going back and getting counter-offers. Personally, though, I just pick the best offer I get from the first round of asking.

3. New is great, but semi-new may be safer and cheaper.

I'm not saying buy a newish second-hand. But if the car model came out just a month or two ago, you typically won't be able to get discounts or freebies.

And if the car is part of a new line or has been totally overhauled (design-wise) it might be best to wait a bit for the feedback to get in and for the car manufacturer to address issues.

4. Consider buying accessories separately.

I'm sure it's great to get the car exactly as you want it on the very first day. But if you're getting it through in-house or bank financing or some other type of loan, it might not make much financial sense.

Take leather seats. Let's say it costs Php10,000 at the dealer. When paying through bank financing (at 10% per year over 3 years, for example), you're actually paying something like ~13,300 - or over 30% more than market value.

Instead of paying interest on an accessory you can otherwise afford, try saving up and/or investing for them instead.

5. Pay in cash, or else get bank-financing rather than in-house financing.

It's cheapest to buy in cash. Not all of us are as blessed though. From experience, bank-financing is cheaper than in-house financing (i.e. loan through the dealer).

If a bad financial picture is preventing banks from loaning you money, it's better to fix that problem first. Getting an expensive loan may just aggravate the situation.

You can refer to my earlier post on different banks' car loan rates. The rates may not be accurate anymore, but at least you have a starting point with which to compare the rates you will be quoted.

(Full disclosure: I and members of my family have worked in a bank. Never on the financial side though, and my advice is based purely on my experience as a customer.)

6. If you're getting a loan, make a huge downpayment

Doing so means you pay less in monthly amortization and paying less in total interest cost over time.

7. Ask about insurance options.

In all honesty, I forgot to do this myself.

If you are buying through bank-financing, you're going to be required to get car insurance. Your car dealer may have partnered with an insurance company and you might not have much choice, but it's still worth asking.

You'll probably have a bit of leeway with the insurance coverage. Get an insurance that fits you, but don't be overly stingy. In my case I opted for a comprehensive one with an Acts of Nature clause because it only added around 4k to my insurance premium (which is good for three years already) and I wasn't sure how flood-prone my new area of residence really is.

8. LTO registration

Another thing I liked about getting a new car is that my dealer handled the legwork for this on my behalf (at no extra cost).

This can also be part of the "freebies" - they'll shoulder the cost as a sales gimmick (if they don't offer, you can try asking).

But if the model you are buying just came out, there are typically no freebies.

For a list of LTO fees and charges, you can refer to their official website: http://www.lto.gov.ph/index.php/services/mv-registration/107-transaction-fees-and-other-charges

9. Ask about maintenance costs

Warranties are void if you don't do the regular maintenance. Even disregarding that, it's better to be proactive and not let problems get worse before having someone look at it.

But from experience, dealers are not so willing to talk about the cost of maintenance. One probable reason is that it can vary from dealer to dealer.

That's right, the same car in the same condition, taken to different car dealers (same brand and service, even if technically a different franchise) can charge differently.

True story: The dealer I bought the car from was going to charge me over 4k for the 1000km check-up (including fully synthetic oil, since 1-2Km is the time for the first oil change).

I didn't have enough saved up (since they didn't mention the price beforehand) and I didn't want to use my credit card. So I opted to wait a while more before proceeding with the maintenance.

When I did have the money (before reaching 2000km), I went to a nearby dealer instead to at least save on gas. Surprisingly they quoted a price of just over 2k. So for my next maintenance, I'll be canvassing some dealers before deciding where to go.