This is the second in a three-part series on how to save big money on vehicles. If you haven’t already, read part one, “How to love the car you’re with.” Also, don’t forget to enter to win the Ultimate Car Care Kit from HomeRight®, running in conjunction with this series. Enter by clicking here or on the photo below.
Besides our homes, cars are statistically our biggest monthly expense. A lot of our hard-earned dollars go into purchasing vehicles and keeping them fueled and maintained. And no matter how well we take care of them, there comes a point when life circumstances dictate that we need to purchase a different one.
So after doing a bunch of research on the subject of car-buying, I’ve compiled a list of six ways we can save thousands of dollars when it’s time to trade in the clunker.
1. Do your homework first.
The Internet is the place to go for car pricing information. Years ago (in the dark ages before the Net), we were at the mercy of a car dealer to convince us of a vehicle’s worth. Those days are gone. At the very least, get competing price quotes online from a site like Edmunds.
2. Negotiate a price via phone or e-mail.
If you’re buying through a local dealer, visit the place first and take a thorough test drive. Then leave the dealership. Call back the next day to negotiate a price over the phone. Or better yet, follow this trick the car dealers hate to secure a rock bottom price. The dealer will hate you, but you’ll most likely get the best price possible.
3. Buy used!
This is probably the best piece of advice, hands down, to save money on cars. Always remember, vehicles are not a good investment; they’re a liability! Yes, it is emotionally thrilling to buy a new car. But a used car is a far better value, plain and simple.
Sure, you can find overpriced used cars and bargain buys on brand-new vehicles, but it’s not just the sticker price that makes a new car a waste of money. The associated fees, subsequent costs and losses in value (i.e. depreciation) add up to thousands of dollars over the first few years of new car ownership. This is especially bad news if you end up upside down on your car loan. Check out this article on 6 benefits of buying a used car (in like-new condition) over a brand new one.
4. Finance wisely.
If you’ll need to borrow money for your next vehicle, get a car loan the smart way. Know what you can afford, put money down and shop for rates. Consider checking auto loan rates with your local bank or credit union before applying for credit at the dealership.
5. Sell your old vehicle privately, if possible.
Whether your old ride is a cream puff or a clunker; you’ll most likely get more for it on the private market rather than trading it in at the dealership, especially when you follow this advice for selling your car. Go the extra mile (pun intended); sell it yourself! If that isn’t possible, be sure to take steps to maximize how much you get for your trade in.
6. Just say “No” to extras and extended warranties.
In general, dealer extras like paint coatings and warranties are a waste of money. The worst thing about an extended warranty is that it is overpriced. In fact, about half of what you pay goes to the salesperson’s commission. So a lot of the money doesn’t even go toward the purpose of the warranty, which is to pay for things that go wrong with the car over the contract period. Instead, consider setting aside half of what you would pay for the warranty or extra, and use that money to handle any car repairs that might come up.
I mentioned in part one of this series that our family committed years ago to paying cash for our vehicles. We haven’t had a car loan in about 5 years now. The six tricks I shared with you today were all part of our strategy and the reason we’re living free of car debt. To read more about our personal financial story, click here.
Have you tried any of these tricks for getting a good deal on a car? Would you buy new or used?