Six ways to save on your next car
Looking for an eco-friendly subcompact or the thrills thatcome with a sports car? Perhaps the practicality of a sedan or a spacious SUVbetter fits your needs? No matter what type of vehicle is calling your name,planning your purchase can help you save as much money as possible.
Consider these six savings tips while shopping for yournext car. Whether you’re concerned about upfront, monthly or long-term costs,there’s something here that can help you.
1. Look for a fuel-efficient car. Buying a hybrid orall-electric vehicle rather than a gas guzzler could help you save money onlong-run fuel costs. Plus, state and federal tax credits might give you someadditional upfront savings.
If you’re sticking to a fully gas-powered car, you canstill save money by choosing a fuel-efficient model. Once you pick a class ofcar and determine your budget, use the Environmental Protection Agency’smiles-per-gallon rating for each vehicle to estimate and compare the monthlyfuel costs.
2. Compare the long-term costs of different cars. Inaddition to fuel, consider the long-term costs of maintenance, repairs,insurance, taxes, depreciation, fees and financing.
To help you with the calculations, Kelly Blue Book has a5-Year Cost to Own tool that lets you compare long-term costs for 2015 and 2016models. Edmunds’s True Cost to Own® tool does a similar thing for 2010 andnewer models.
3. Buy a "new-to-you" car. Buying a used carrather than the equivalent brand-new model can usually save you money. However,you’ll want to look at each used car on an individual basis. Consider how itfeels during a test drive and its history if you can access it.
You may be able to buy a warranty for your used car, or youcould purchase a certified pre-owned (CPO) car from a dealership. Dealersinspect CPOs before selling them with a manufacturer’s warranty. If you’re notbuying a CPO, you could hire a mechanic to perform a pre-purchase inspection.It’s not a guarantee, but the inspection can help ensure you won’t get caughtoff guard by any unexpected issues.
With the right deal on a used car, you might be able to buythe car outright instead of financing the purchase. By paying cash, you avoidaccruing interest, making monthly payments and worrying about loan-originationfees.
4. Negotiate the purchase. Most people don’t enjoy hagglingwith a car salesperson, but even non-confrontational negotiating tactics canhelp you save money.
For example, once you pick a make and model, you could shoponline for available vehicles at nearby dealerships. Reach out to each dealer’sinternet sales team and ask for their best total cost, inclusive of taxes andfees.
Take the lowest offer and ask the other dealers if they canbeat it. If one of them can, take your new lowest quote and again ask the restof the dealers to go lower. Keep going until you get a price that works bestfor you.
You could use the same tactic with dealerships outside yourarea. However, you may have to travel and pick up the car or pay to transportit.
Another helpful resource is negotiation services likeAuthority Auto, which negotiates competitive prices on new and pre-owned cars.For a fee, the online service negotiates each part of the process to get you abetter deal and take some of the stress out of the car-buying experience andonly charge a percentage of what they save you.
5. Consider leasing instead of purchasing. Taking out alease is similar to purchasing a long-term rental. You’ll have to return or buythe car at the end of the lease, and you may have to pay fees if you drive toomany miles or damage the vehicle.
The lease down payment and monthly payments will be lowerthan buying the same car outright. However, you can still save money byshopping around and negotiating because the down payment and monthly paymentsdepend on the vehicle’s sale price.
If you like to drive a new car and always want to be underwarranty, starting a new lease every few years could make sense. On the otherhand, there’s more long-term value in buying if you tend to have a lot of wearand tear on your cars.
6. Use alternative means of transportation. Forgoing thepurchase of a car altogether might not work for everyone, but it’s worthconsidering if you live in a city or don’t regularly drive long distances. Insteadof owning a car, you could get around with a mix of carpooling, publictransportation, walking and biking. You could also still have access to a carif you join a car-sharing program or use a ride-sharing app or taxi service.
There are many ways to save money on your next car, and youshould almost certainly plan your purchase before signing any dotted lines.Start by researching all your options, including living without a car, buyingused and leasing. If you decide to purchase a car, you can compare thelong-term cost of different makes and models and save money upfront by hagglingwith sellers.
Nathaniel Sillin directs Visa’s financial educationprograms. To follow Practical Money Skills on Twitter:www.twitter.com/PracticalMoney..