Due to the current market, buying a car can be expensive - but there are ways to save, even today. We recommend maximizing your savings however you can when buying a car.
With housing prices going up, it’s no surprise that car prices are skyrocketing. In addition, consumer inflation rose to 7% in 2021 and is not going down anytime soon.
Inflation isn’t the only culprit, though. Car manufacturers have been struggling to source parts - so even people ready to buy can’t find their new car ready-made for them.
A new and trendy alternative to avoid markups and supply issues is to order your car directly from the manufacturer.
Now more than ever, saving money where you can is a better move. The future looks uncertain, and gaining traction somewhere will help you navigate the climate.
That’s why we recommend maximizing your savings however you can when buying a car.
Here are our 5 ways to save when buying your next vehicle.
Dealerships tend to have a lot of hidden fees. Check out this list of hidden fees:
Some dealerships will also try to charge you for paint sealant and rust protection. Sure, a shiny car that doesn’t rust is what we all want, but shouldn’t that be included in the basic price? Also, buying anti-theft protection from a dealership can often cost double as much as third-party installers.
A private seller probably doesn’t have a quota to meet, and this may be the only car they have to sell, so they may be more open to negotiation. It comes down to you being able to negotiate your price.
New models will always be more expensive, no matter when you’re buying. So do you really need the latest designs and built-in gadgets? Is it really worth the extra expense?
On a used car, try not to exceed 10 years or 100,000 miles. The best option would be a 5-year-old car with around 20,000 miles that is in your budget.
A newer car may look more flashy, but if you just need something to get from point A to point B, look for a reliable car within your budget.
Financing a car can be a smart move. It can be a great way to build up your credit, especially with a low interest rate and with payments that land within your monthly budget.
You have two options when financing a car:
Search around various banks and private lenders for an auto loan. Most leases are offered by car dealers, but you might find some from banks. Determine which has the best rates and terms, and check out the fine print for hidden fees and penalties. There may be stipulations that complicate what you can afford.
The best way to buy a new car is to pay in cash - or as much cash as possible, to avoid the costs of loans and leases, including the chance of potentially defaulting.
Ideally, you can save for a car in a targeted fund, and consider a high yield savings account. They don’t pay like they used to, but a high-yield savings account can at least help your money grow.
Plus, separating your money into a savings account, or a fund within a saving account, will help focus your efforts. Try adding small amounts week by week. It starts to add up!
If you’re looking at buying a car, it can be in your best interest to go through alternative routes or to purchase a used car. If you are going to finance a car, make sure you can afford the monthly payments. Never go outside of what you can afford.
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With almost 10 years of experience in the accounting field, Caryl enjoys writing about personal finance, plays a role in helping others reach their potential.