With approximately 4,071,000 miles of roads throughout the United States, it’s no surprise that most of us see having our own vehicle as a necessity. Even in places where public transport is readily available and financially accessible, owning a car is both a modern convenience and a rite of passage that many Americans can’t see giving up. That said, this freedom doesn’t always come cheap. The U.S. Bureau of Labor Statistics recently estimated that the average vehicle costs $9,576 per year to own and operate — and that very well be on the conservative side.
Of course, those costs might represent a substantial financial burden for many. With countless Americans struggling with student loan debt, unable to buy homes, and embracing the necessity of the side hustle (or several), spending several thousand dollars on a vehicle may not be realistic. As of September 2018, U.S. consumer debt reached $3.95 trillion, and the last thing most people need is to purchase a car they truly can’t afford. You may not be in a position to forgo owning a vehicle, however, which makes things a bit trickier. Ultimately, your ability to buy a car you can actually pay for is to keep some top money-saving tips in mind. Here are a few clever ways to cut costs when it comes time to buy your next automobile.
Buy Used Over New
Buying a shiny new vehicle can be tempting, but it’s really not the most financially sound way to go. You might not realize it, but new vehicles can depreciate in value by 40% to 50% in just three years! By buying a used vehicle, you’ll likely get more for your money. Not only will you have a chance to gain access to a model that might otherwise be out of your reach, but you also won’t experience the same depreciation loss that new car owners do. Holding onto your vehicle for a longer period is also a good money-saving tip, as frequent trade-ins will actually cost you in the long run. As long as you make sure that the vehicle is in great condition, it literally pays to buy used.
Compare and Research First
Don’t wait to get to the lot to decide on a car or buy the first one you find. You should take the time to research the market value of the cars you have in mind, as well as any pertinent consumer reports that will showcase the advantages and drawbacks of those models. For instance, although two-thirds of Canada-U.S. trade is moved by truck, larger vehicles like these are likely to cost more in terms of mileage and insurance. Smaller vehicles, on the other hand, are lighter and usually cost less to insure and to drive. By learning the ins and outs of a particular vehicle, you can eliminate unnecessary extras and make sure the value is truly there.
Separate the Process
If you’re buying your car from a dealer, you should watch out for salespeople who want to combine trade-ins, financing, and purchases in one single deal. This usually culminates in the buyer paying far more for their car than necessary. Telling the salesperson what you can afford in a monthly payment essentially allows the dealer to charge whatever they want — and you’ll be none the wiser. Instead, negotiate the price of the vehicle first. If you act like you’re a cash buyer or make the salesperson understand that financing will only be discussed once a price is agreed upon, you’ll have more leverage. After that, you can negotiate a trade-in price, if applicable; if you combine these two steps, you might end up paying full sticker price for the new car, which doesn’t benefit you at all. Knowing what your trade-in is worth before visiting the lot will help. After that’s settled, you can talk to the finance department (though it’s a good idea to obtain at least one other financing quote beforehand). You don’t necessarily need to obtain financing through your dealer either, as other businesses or lenders may offer you a better financing agreement or loan terms. While purchasing your vehicle in cash is preferable for some people, it’s not always feasible. This way, at least you’ll have more control over your financing when it’s needed.
Factor In Maintenance and Fuel Efficiency
Data shows that the U.S. consumes the most energy in the world after China, using 2,272.7 million metric tons of oil. Of course, the more of these resources we use, the worse off our environment is. And for motorists, the worse a car’s fuel economy is, the more they’ll have to pay over time. One recent survey found that almost nine out of 10 adults say automakers should improve the fuel economy of their vehicles — and that’s an important metric to keep in mind when buying a car. You should remember that specific car features (like air conditioning, automatic transmissions, and certain kinds of engines) will impact your fuel economy and how much you’ll pay to power your car over time. You’ll also want to consider interest rates, insurance premiums, registration costs, and additional features when determining which car you’ll choose. It’s about much more than the sticker price or your loan terms. Determine your budget and make sure that you’re considering the entire picture before you purchase.
Buying a new (or used) car can be incredibly stressful. After all, it’s one of the biggest purchases you’ll probably make in your lifetime. But if you remember these tips, you’ll be able to lower your overall costs and make vehicle ownership more realistic for your financial situation.