Anyone who has gone through it before can tell you, there are certain things you need to do and certain things you need to avoid when purchasing a car. With so many moving parts, it can be easy to lose track of your main objectives, like staying on budget. Because of this we decided to write up a few tips specifically tailored to those buyers working within a budget.
What Type of Car Do You Want?
Once you have determined the maximum amount you are willing to spend on your car, start looking for car models that fit your budget. You need to ensure the car models you have shortlisted have the necessary features beyond just the right price point. For example, sedans and hatchbacks are great for singles, couples, and small families. SUVs and Minivans, on the other hand, are ideal for large families and road warriors.
Budget Before You Buy
Unless you are paying for your car in cash, you will need to finance the purchase. Take into account all of your existing loan payments and monthly expenses to decide how much you can afford to pay per month. Aside from the price you also need to think about fuel expenses and general car maintenance costs. Take the time to sit down and calculate the maximum amount you would like to spend on the car purchase.
Finalize Your Financing
Car loans are offered by private lenders, banks, financial institutions, and car dealerships. You need to decide the financing option that is best for you before you hit the lot. Some of the main factors that you need to focus on are interest rate, loan term, processing fees, and other “miscellaneous” charges. Find out your credit score before you talk to anyone about financing. A good credit score can help you get a lower interest rate and more attractive loan terms. Try to keep the loan term short while also ensuring that monthly payments do not disrupt your budget.
Research Car Prices
There is a huge difference between prices on old and new cars. New cars suffer the highest depreciation in the first few years and the first owner has to bear it. Getting a 3-5-year old car for a few thousand dollars is a great option, especially when considering that the new model of the same car would cost a fortune. Based on your previously defined budget, you need to decide what is realistic for you- a new car or a used one.
Compare Models from Different Manufacturers
You should not stick to your favorite car brand when buying a car on a budget. There are several less popular brands that also offer good cars at a comparatively lower price than their more popular counterparts. When you shortlist any model, perform research about the car model along with its year of manufacture to learn everything you can about recalls and potential problems. You can find detailed reviews of older models on the Internet by simply looking up the model and year in question followed by the word “reviews”.
Negotiate the Price
Car dealers initially ask for a higher price as it is an expectation now that buyers will try to negotiate it down. When you are armed with information, you are in a better position to negotiate. The MSRP of new cars is not the final price. Similarly, the list prices on used cars are also not the final sale prices. Most car dealerships are open for price negotiations as a means to avoid the loss of sale opportunities.
Smart buyers do everything they can to save money. If you want to make sure you are getting the best price on your big purchase, follow these tips and get the car you want at the price you need.