If public transportation isn’t available or adequate in your city, or if you have to travel extended distances regularly, you’ll need a car—but buying a car can be both stressful and hard on your budget. Fortunately, there are several strategies you can employ to get a better deal on your next car, most of which are simple enough that anyone can use them.
Understand the Costs of Car Ownership
First, you need to understand the true costs of car ownership. Most people are tempted to only look at the total purchase price, or the monthly cost if they get a loan to pay for the car, but there are more variables to consider.
For example, if you’re getting a loan, your monthly payments are going to include both principal payments and interest payments. On top of that, you’re going to need to pay for insurance, fuel, and ongoing maintenance costs; for example, you’ll need to get your oil changed at least twice a year with most models.
You’ll need to build all these individual costs into your total budget if you want to prepare your finances completely.
Shop for the Best Loan
Your loan will play a massive role in determining how much you pay for your car overall. An unfavorable loan with a high interest rate could easily multiply the total lifetime cost of your vehicle. Fortunately, there are a number of car loan options available, from lenders of many shapes and sizes. You can compare interest rates, terms and conditions, and more to find the best possible deal, and reduce what you pay for your next car.
Save for a Bigger Down Payment
You can lower your monthly payments by offering a bigger down payment—or even paying for your car outright, completely in cash. The bigger your down payment, the smaller the loan you take out will be, and the smaller your loan, the less interest you’re going to pay. You can save for a bigger down payment by reducing other expenses, like your housing costs, utility bills, or entertainment expenses—or by picking up a secondary stream of income, like a part-time job.
Buy Used
Lots of people are tempted to buy a new car for their reliability or image, but it’s usually better to buy used if you’re looking for a good deal. New cars depreciate fast, and used cars can be highly reliable if they’re properly maintained, so there’s no reason not to at least consider purchasing a used vehicle.
Search for a Model
A “good deal” on a car isn’t just about getting a lower price—it’s also about getting the most value for your money. Depending on your goals, that could mean finding a car with a better safety rating, higher reliability, or even better fuel economy. Do your research online to learn more about the models you’re considering, and find the “perfect” model for your own needs.
Do Your Research and Shop Around
Once you find a few models that interest you and fall within your budget, do your research and shop at both online and in-person dealerships and marketplaces. You’ll get a feel for what people typically pay for used cars of this make and model. You’ll also learn some of the pitfalls to watch out for; for example, you may learn that this model prematurely degrades in some way. The more informed you are, the better you’ll be able to negotiate later.
Avoid Options
Most new cars have a variety of superficial options that can improve your experience, but these rarely add much substantial value to the vehicle—and they can cost hundreds, or even thousands of dollars. If you have the power to choose, avoid options wherever possible. And if you’re considering buying a used car with options already included, try not to let those options influence your purchase price too heavily.
Negotiate
Finally, learn to negotiate. Due to the transparency offered by online price comparisons, negotiating a price for a used (or new) car isn’t as cutthroat as it used to be. But you can still put yourself in a better financial position by pushing for a lower price—or for more “extras,” like a couple of free oil changes from the manufacturer after buying a new vehicle. Additionally, don’t be afraid to walk away from a deal you don’t think is good enough.
There are dozens of individual ways you can get a better deal on your next vehicle, and any one of them could shave hundreds to thousands of dollars off the total cost of your car. If you use them in combination with each other, you’ll be able to save even more money.