For most adults, car shopping is a fact of life. But it isn’t a common occurrence and, as a result, it can create real excitement and cause no little stress. On the one hand, you’re getting a new car, but on the other, it is probably going to cost you a pretty penny. The average cost of a new car is $37,000 and a used car will generally set you back between $15,000 to $20,000 so it’s certainly not a small purchase. But although that may seem like a daunting expense, there are plenty of ways to make your dollars go that bit further when you are in the car market.
Determine How Much You Can Afford
The first step in your search for a new car should always be working out your budget. In fact, it is never not a good idea to work out what your budget is, whether you are shopping for Halloween or Christmas, going bargain hunting at vintage stores or buying a new set of wheels. Be honest with yourself about how much you can afford to spend or finance.
As much as you might want that brand-new $35,000 car, you’ll never be able to enjoy it if it puts too big a dent in your finances. That said, because a car is a big and rare purchase, don’t hesitate to dip into your savings or make use of other windfalls like work bonuses or a tax refund to add to your budget.
It’s also a good idea to look at your other current expenses and work out where spending on a car fits into your list of priorities, particularly if you intend to finance. And on that note, make sure you are fully aware of what you are signing up for. For example, some car dealers can make the monthly payment seem smaller by stretching out the term for 5-7 years. But do you really want to be paying for your car for that long?
Check Your Credit
If you’re going to be financing a car, check your credit early on to see where you stand. The better your score, the better rate you can get on a car loan. It doesn’t affect your credit when you check your score online and it usually doesn’t cost anything, with sites like Credit Karma or Credit Sesame providing a free credit check. But do keep in mind that these sites provide a Vantage score which is different from the Fico score most car dealers use. Your score may show up higher on a site like Credit Sesame than when checked by a car dealership, but it does give you a range to consider.
If you want to make sure you have absolutely all the information sites such as MyFico can provide a more detailed report, albeit at a cost. Discover Scorecard, which is free to use and gives you your fico score, might be the best option if you want an update on your credit score ahead of purchasing a car. But as checking your credit score does not affect your credit, it is worth investigating a variety of options before making a decision.
If you know you are going to be in the market for a new car in the coming months or year, work to improve your credit. Improving your credit score has numerous benefits. In fact, if your credit score is high enough you may even be able to get a 0% APR on your car loan for several months or years.
Compare Your Shopping Options
There are so many places to consider when you’re looking to buy a car. There are car dealerships, private lots and even rental car companies that sell cars like Enterprise. You can start by visiting a few websites or calling car lots to see what type of inventory they have. Car dealerships generally do a good job of regularly updating their website, which should give you an indication of what your options are. But there is no substitute for visiting in person, so be sure to schedule a day and time to come in and look at cars and do a few test drives.
New or Used?
Perhaps the most important decision ahead of buying a car is whether to get a brand new vehicle or go down the used route. For most people, buying used will be the best decision because it saves you money. Used cars can be in great condition and some even have low mileage. Buying used doesn’t have to mean your car was manufactured in 1992. On the contrary, you can typically still buy a fairly new car that has all the features you like without the brand new price tag. You may even be able to get a warranty on the used car as well for a few years.
When looking at a used car, make sure you ask to see all the details regarding the full history of the car like maintenance, repairs and accident history. CarFax is a valuable online resource that provides detailed reports on all used cars. If you’re purchasing a car from a private owner, you can always have a mechanic come with you to assess the vehicle. Remember, it’s important to do your due diligence in this area because if you catch potential issues early, you will save a lot of money.
Where To Finance
If you’re going to finance your car, as most people do, it’s important to get the best deal you can, as it is far from a short term commitment. Car dealerships tend to offer in-house financing, but it’s not always the best. It also takes a while as your salesperson may spend time shopping around with dozens of their lenders to find you an ideal interest rate. Other car lots may offer a ‘buy here pay here’ option where you don’t have to finance through another company.
But while this may sound convenient, you are sacrificing the chance to compare rates and you could end up overpaying for financing as a result. One of the better options to get affordable financing is to use your bank or credit union. Don’t forget, you can also get financing online from trusted lenders. See if you can get a loan with better terms and interest then pay the car owner or dealership with the cash. From there, all you’ll need to do is pay the loan off from the third party lender of your choice.
Saving More on Your Purchase
Buying a car is going to be expensive no matter how you dice it. However, there are quite a few things you can do to save money on your purchase. Trading in your car is one way you can lower the cost, with some car dealerships offering cash if you trade in your current car in exchange for the new one. Depending on the car you have and its condition, this could save you hundreds or even thousands of dollars.
Don’t forget to negotiate. Larger dealerships may not be so willing to work with you, but there will probably be some wiggle room. And if you’re buying from a smaller car lot or private owner, they may be more willing to negotiate on the price of the car. Auto insurance, meanwhile, is a requirement, but that doesn’t mean you have to pay an arm and leg for it. Shop around and compare quotes to find the best option for your needs and preferences.
Follow the advice above and when it comes to your next car purchase, you should be well-prepared to get the best deal possible.