How To Save Money When Picking Your Next Car

Buying a car isn’t the cheapest expense when it comes to household purchases. However, for many, a car is a real necessity that many can’t avoid. It might be crucial for getting your children to and from school, and of vital importance for doing your job.

Saving money when picking your next car is certainly appreciated, and there are plenty of ways to do so.

In this guide, we’ll take a look at how to save money when picking out your next car.

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Preparation and budgeting

The first step of buying a car is preparation and budgeting. Two efforts that need to be made and decided upon in order to get the right choice for your needs and for your wallet.

Your budget should be realistic, and it should be able to determine what you can realistically afford to spend on the car. This isn’t just the purchase of the car itself, but everything that comes with it, from the running costs to insurance and taxes.

You should aim to spend no more than 15% of your take-home pay on car-related costs, so factor this in when it comes to budgeting.

The 20/4/10 is a good rule to stick by when it comes to financing your car purchase. For a balanced budget, look at 20% as a deposit to put down, financing for no more than four years at a time. You should then keep the total transportation costs below 10% of your monthly income.

Pre-approval for a loan is something that you’ll need to get, especially if you’re planning to finance your next vehicle. Make sure to do this before visiting a dealership. That way, you have better leverage when negotiating.

The total cost of ownership, though, is perhaps the most important part of picking your next car. From the car’s fuel efficiency to maintenance and registration fees, some cars wil be more expensive to run than others.
 

Choose the right car

Next comes the choice of a car for you and your needs. Whether you’re a family of four or a young couple looking for a vehicle used for daily commuting and weekend adventures, there are a lot of choices to pick from.

New cars will lose around 20% of their value in the first year. Alternatively, purchasing a car that is around 2-3 years old offers a balance of modern features, less depreciation, and lower price points in general.

There are some cars that are new, which dealers will register in their own name in order to meet sales targets. As a result, those cars will have low mileage and great discounts available.

For some cars, they may be approaching the end of their production line before a new model is ultimately released. This can often result in significant dealer discounts being available.

Downsizing is also an option for those who have the ability to do so. A small car with a smaller engine will often mean a lower purchase price, better fuel economy, and lower insurance premiums. It’s worth thinking about the choice between manual and automatic transmission, with manual gearboxes often being a lot cheaper to buy and maintain than automatics are.
 

Negotiation and purchasing tactics

One of the most influential steps that’s worth thinking about as you look for your next vehicle is how well you negotiate. A lot of the time, you should focus on the total price of the vehicle, rather than just the monthly payment, as this can hide high interest rates.

If the dealer isn’t meeting your price when negotiating, then be prepared to leave. This is one of the strongest bargaining methods because many sellers don’t want to lose the opportunity for sale. If they do let you leave and they have your details, they may always come back with a better offer.

Timing your visit is key, too. Shopping at the end of the month or quarter to capitalize on sales targets. If you’re trading in your old car, then it’s worth negotiating that value separately from the price of the new one.

There are, of course, some unnecessary add-ons that dealers may try to convince you to buy. From extended warranties to paint protection or rustproofing. All of these options can often be found cheaper elsewhere, or you may not want that extra coverage.
Long-term savings

When it comes to saving money in the long-term, there are some long-term savings to consider.

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Firstly, check with different insurance groups in order to find the right one for your vehicle needs and financial affordability. You must maintain your vehicle so that you can prevent costly and unexpected repairs. Cars are often ranked by insurance risk, so lower numbers will mean cheaper premiums.

Refinancing is a good way of getting a better deal on financing. This can be something that you can look into later down the line.
 

Choosing between a new and a used car

As mentioned, there are some financial benefits to choosing new and used cars. Let’s take a look at some of the pros and cons of both.
Pros and cons of new cars

With new cars, you get a full manufacturer's warranty, the latest safety/tech features, as well as no immediate maintenance and a car that’s in pristine condition.

New cars are best for those who want peace of mind, have long-term ownership in mind, and want the advantages of modern technology.
 

Pros and cons of used cars

With used cars, you’ve got the luxury of a lower purchase price and a slower depreciation. There are also lower insurance costs and lower sales tax to benefit from, too.

Used cars are best for those who are budget-conscious and are after shorter-term ownership or better value.

The downside to used cars is the potential hidden faults, limited warranty, higher maintenance costs, and likely higher finance rates, too.

So what helps you decide between the two? Well, think about depreciation as new cars lose more of their value in the first three years. The total cost of ownership, as well as mileage and usage, is something to consider, too.

These tips will help you save the money you require for your next car purchase.

 

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