Need a new car? Car shopping can provide the perfect mix of excitement and stress. On one end, you’re getting a new car. On the other, you probably know it’s going to cost you a pretty penny.
With the average cost of a new car being $37,000 and $15,000 to $20,000 for a used car, there is plenty of opportunities to save money on this large expense. In this guide, you’ll learn some basic car shopping tips along with how to save money and get more bang for your buck.
Determine How Much You Can Afford
It’s best to determine a budget before you start looking for cars. Be honest about how much you can afford to spend or finance. If you can’t see yourself paying a car note for a $35,000 vehicle, don’t put yourself in that situation.
Tap your savings and use other windfalls like work bonuses or a tax refund to add to your car budget. Look at your other current expenses and see how much you can afford if you’re going to finance along with how long your ideal term would be.
For example, some car dealers can make the monthly payment seem smaller by stretching out the term for 5-7 years. Do you really want to be paying on your car that long?
Check Your Credit
If you’re going to be financing a car, check your credit early on to see where you stand. It doesn’t affect your credit when you check your score online and it usually won’t cost you anything.
See if you can use a site like Credit Karma or Credit Sesame to check your credit for free. Realize that these sites provide a Vantage score which is different from the Fico score that most car dealers use. Just keep in mind that your score may show up higher on a site like Credit Sesame but it does give you a range to consider.
You can also try to sign up for MyFico to check your actual Fico score or Discover Scorecard which is free to use. The better your score, the better rate you can get on a car loan.
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. There Car dealerships do a good job of regularly updating their website.
Schedule a day and time to come in and look at cars and do a few test drives.
New or Used?
A common question car buyers have is whether they should get a brand new vehicle or go the used route. This really depends on your budget and preferences. For most people, buying used will be the best decision because it saves you money.
Used cars can be in great condition and some may even have low mileage. Buying used doesn’t have to mean your car was manufactured in 1992. You can still buy a fairly newer 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 considering a used car, make sure you ask to see all the details regarding the full history of the car like maintenance, repairs, accident history, etc. CarFax is a site that provides detailed reports on all used cars that you can access. 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 can save a ton of money.
Where To Finance
If you’re going to finance your car, you want to get the best rates and terms possible. Car dealerships tend to offer in-house financing but it’s not the best. It also takes a while as your salesperson may spend time shopping around with their dozens of 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. While this may sound convenient on the surface, you won’t have any other rates or offers to compare and the car lot may not have the most competitive offer. This means you could end up overpaying extra for financing.
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’d need to do is pay the loan off with your 3rd party lender.
Saving More on Your Purchase
Buying a car can be expensive no matter how you dice it. However, there are quite a few things you can do to save while car shopping.
Trade-in your current car. Some car lots and dealerships will pay you 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.
Have excellent credit. There are so many benefits to having great credit. With a high credit score, you may even be able to get a 0% APR on your car loan for several months or years.
Negotiate. Many people forget that they can negotiate the price of their new car. Dealerships may not be so willing to work with you, but 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.
Shop around for insurance. Auto insurance is a requirement. Still, 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.