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To most people, a car is something that they can’t do without. It’s got plenty of perks, and one of them is not using the sometimes unreliable schedule of public transportation.
If traveling around town and going for summer vacations and parties are your thing, then you probably want to own a car if you don’t have one already.
Though cars are convenient and having one is the best decision that anyone can ever make, some people choose to do without one because they feel that it’s way above their budget.
A large number of cars are super expensive. Depending on the model, brand, and make, you may need to break the bank if you want to buy one.
Throw in additional costs like repair and fuel costs, and you’ll realize that there’s so much more that you need to consider before buying a car than what meets the eye.
This can be tricky if you’re on a budget since the only option is to direct most of your hard-earned income to your car-buying venture. Some go to the extreme of leaving out everything else so they can raise enough dough for a car.
If you’ve got kids and lots of bills that need to be sorted out, it’s easy to rule out the idea of getting your ride.
Don’t rule out the possibility of buying a car even when you’re on a budget just yet. You have to be ready to weigh options, do some digging online or listen to what the pros have to say before making a decision.
The good news is, this post covers all the information you need, so you won’t have to break a sweat. Here are tips on how to buy a car if you’re on a budget:
1. Shop Around
Despite where you live, it’s no secret that finding a car dealer or two is relatively easy. Buying a car from the first dealer you come across may seem like an easy way to get it over with.
However, not having several options to choose from often leads to disappointments and unmet expectations.
The safest way to get the best deal from a car purchase is to dedicate your time to shopping around and scouting for options.
Here are some pointers that you should try out if you’re new to the car shopping game:
Look Out of Town
If you’ve got some time and money to spare, there’s no harm going out of town and checking out other car dealerships considering that car prices vary depending on where it’s sold.
Have a Timeline as to When You’ll Buy the Car
A timeline can save you from making any rash decisions. It also helps you plan well for your time so you can achieve your goal before time runs out. Putting the type of car you want to buy into consideration is a fast way to create a timeline if ever you’re stuck.
Walk Out of a Dealership
Experienced dealers can quickly tell a first-time car buyer from one who’s done it before. First-time buyers don’t usually negotiate for a lower price.
If you try negotiating but the dealer refuses to give in, the best way to find out their lowest price is to walk out of their office. Chances are they’ll come after you because they need the sale.
Note: Don’t walk out of every dealership. Pick at least one from your options.
2. Do Some Research
Realizing that you need a car is a piece of cake. The hard part is finding out the type that you want to buy. There are so many options out there, and each has a different price.
Look on the bright side. You don’t want to buy all the cars available. You can, therefore, make things simple for yourself by narrowing down your list. Carry out some research on the cars that you’re hoping to buy.
What better way to get so much information while doing very little than by using the internet? It’s a handy source of valuable information for reviews and car specs.
In addition to the internet as well as any other details you may know about cars, other research tips that you can use are:
- If you wish to buy a brand new car, don’t research its MSRP. Research on its invoice price instead. It’s the price that’s given by a manufacturer when the car is sent to a dealer. It can help you find out the lowest price that a dealer can sell a car and make some profit from it.
- If you’ve got a car already and your budget is tight, giving it away to get a new one or selling it can reduce the purchase price of your next vehicle drastically.
- Consult your pals and family members. Do they have a car that’s similar to your dream vehicle? Ask about the maintenance, performance, and mileage of the vehicle.
- Consider buying a used car if you’re experiencing some financial glitches. The two main things that you should research about such cars are their current value and the recent resale price of the car model you have in mind.
3. Car Extras Aren’t a Necessity
Having a vehicle that stands out from the rest is every potential car owner’s dream. It’s no wonder that many car owners jazz their cars up with car extras.
A set of dropped coils, bigger wheels, a sub, and any other car extras are some of the things you’ll have to pass on if you want to buy a car on a budget.
Granted, your vehicle will look boring and plain, especially if it’s a used car but it helps to look at things from a different perspective.
For starters, those wicked upgrades may give your vehicle that wow factor, but they won’t change its value.
And the extras will depreciate as time goes by. There’s no guarantee that you’ll get your cash back if you decide to trade-in or sell your car.
Maybe you’ve been to an auto shop and have seen the accessories or your friends or relatives have a car with extras. The temptation to get yourself one like that is pretty strong.
Car extras may make you borrow a loan, which will eventually cause a strain on your finances. If you’re having trouble fighting the car extras-buying urge, try:
- Clearing up your inbox if you’ve subscribed to auto promotional messages and newsletters
- Appreciating the big step you’re almost taking. Hey, buying a car is no small deal no matter its make!
- Not going for rides with that friend or relative whose car has those fancy adds. To avoid seeming rude, explain to them why
- Coming up with a rule against buying unnecessary stuff and remind yourself of the consequences.
4. Negotiate if Necessary
Buying a vehicle is the second most important investment you’ll ever make after purchasing a property. You should, therefore, handle the process with the seriousness it deserves.
It takes up to six years to pay the whole amount of a vehicle in most cases. To ensure that you get bang for your buck, you should look the dealer in the eye and negotiate terms with them.
Negotiating seems complicated if you’ve never done it before, but once you get used to it, it’s a breeze. Here are some tips to help you be your best as you negotiate:
- At the start of the process, work from your strong points: competing bids from car-buying websites or other local dealerships
- Take control by informing them that you’ve done the necessary prior research, and you’re ready to walk if they don’t meet your target price and you already have what you’re ready to pay down.
- Kick off the bargain with your precalculated low offer. Expect a back and forth as the salesperson presents your bids to the sales manager and comes back with counteroffers.
- Remember to avoid being argumentative. Also, let them know that you have competitive bids in hand from alternative dealers.
- Stand your ground. The salesperson may dismiss your claims. If they say your figures are wrong, present a printout of your sources of information but don’t disclose any further details.
- Know when to call the bargain quits. Some nice instances are when the salesperson makes a “take-it-or-leave-it” offer and when they try persuading you that the rebate is available to customers who pay the sticker price only.
5. Don’t Trade-In
Searching for the easy way out of any situation is part of our nature: Taking the elevator instead of stairs, buying processed food instead of whipping some up for ourselves, shopping online instead of at the store…you get the idea.
Many people extend this sometimes-dangerous nature to matters relating to their car. Instead of going through the hassle, they choose to trade-in their car.
The result? They get less money than what they’d have gotten if they sold the vehicle themselves.
Dealerships are businesses. They aim to make money from their purchase from you. They aim to buy your car from you at a “discount” so they can see to it that they can raise the price and rake in a profit.
This is after they’ve spent their moolah on the initial repairing, buying, marketing and sprucing up your old fuel guzzler.
Also, it’s not a guarantee that they’ll accept your car. Two common instances when this happens is when the public isn’t interested in your type of vehicle and if they have other similar vehicles in stock.
Why endure this rip-off when there are lots of marketplaces from where you can sell your vehicle safely and quickly? Examples of these marketplaces are Craigslist, AutoTrader, and eBay.
If you intend to stick to trade-ins, be safe. Check the value of your car with Kelley Blue Book first before taking it to the dealership.
KBB can assist you to know or estimate the market value of your vehicle, whether you’re selling it privately or trading-in.
6. Go for a Used Vehicle
Buying a vehicle that someone else has used is the last thing that you’d want to do as a car buyer. It may sound downgrading and unappealing, but it’s the right thing to do.
New cars have the latest technology (most of them), a single-digit on the odometer and a fresh scent that’ll leave you wanting to chill in it even if you’re not going anywhere.
We hate being bubble-bursters, but new vehicles are a no for you if you’re on a strict budget. First of all, they’re more expensive- and that’s a no-brainer.
Many of them depreciate as much as 25% within a few weeks after purchase. A wiser financial move is to lease or buy a car that’s got a few miles on the odometer.
A new vehicle means insurance. A large number of them have a higher premium, which could bruise your budget. Whether you’re shopping used inventory or new, have the total cost of the vehicle in mind.
If keeping up with trends is something you love doing, getting the latest vehicle in the market is probably something you want to do. Bear in mind that it’s in a kind of testing phase in its newest stages.
Experts may test-drive and inspect them, but the cars are prone to change or updates within the first couple of years on the market.
Professional dealerships selling used cars put them through thorough inspections and testing so the vehicles can meet the high standards set by the manufacturer.
Most if not all of these cars still have the manufacturer’s warranty, so you’re rest assured that you’ll be covered should anything go wrong.
7. Steer Clear of Dealership Financing
Auto retailers go through any possible lengths to get customers. One of them is offering its customers a sweet dealer financing deal.
If you’re a die-hard tube or radio fan, you’ve obviously heard those exaggerated ads that claim “No Credit Checks!” or “Instantly Approved” and have thought of applying for dealer financing.
Here’s a quick piece of advice: Don’t. Ads make them look easy and hassle-free but in actual sense, you’ll end up paying more than what you borrowed. Before going any further, it would help to find out what dealer finance is.
Also called an indirect loan, dealer financing is a kind of loan that retailers give to their customers. The loan is then sold to a third-party financial institution like a bank.
Car retailers choose to use them because they enable them to secure vehicle sales more readily than they do when they wait for potential buyers to arrange financing on their own.
The third-party institution buys the loans at a discount then collects interest and principal payments from the borrower. Lots of auto dealers mark up the interest rate of the company then keep the difference as added profit.
The rate of purchase is the rate of interest that the financial institution presents to the dealer for financing.
Note the interest rate that the dealer offers to the customer isn’t constant. It can be raised higher than what the buy rate is.
It’s not the dealer’s job to offer you as a customer the best interest rates available. This allows them to longer terms or higher rates on financing.
8. Keep an Open Mind
It’s good to know what you want and settle for nothing less but let’s face it: we’ll not always that we get what we want.
This may be the case even when buying a car. You may have researched a specific brand and loved it or you’ve owned a particular brand before and want the exact one when you walk into an auto shop.
In case you don’t find what you’re looking for, avoid throwing a fit or causing a scene. A better way to go about it is keeping an open mind.
Do your homework and you’ll find out that countless manufacturers offer awesome products at awesome deals with unbelievably nice deals. You won’t have to compromise on looks and safety.
You’ll find another car, probably better than what you hoped for, that perfectly fits your budget and image.
Being open-minded isn’t a virtue that comes naturally to everyone. If you’re one of those who feels that being closed-minded is who you are, you can change your perspective with a little more practice, curiosity, and patience. Check out these tips to becoming open-minded:
Don’t Anticipate Negative Outcomes
No one can tell what will happen in the future. Most of us try and guess how everything will be, especially from the negative sense.
A better approach is taking time to consider every possible outcome of a situation, the pleasant, unpleasant, and whatever comes in the middle.
Think About your Frustrations Expansively
When things don’t go as planned, an effective way to handle the frustration is to ask yourself if it’s an inconvenience or tragedy. This allows you to view the situation from a different angle and think of it expansively.
9. Find Out What Your Car Budget Is
Cars need all the care they can get if they’re to serve you for long. Setting aside money for the asking price is a step, but it isn’t enough. You need to dig deeper.
Avoid doing the math in your head. Also, don’t rely on the essential details you know about cars. Find out the expenses related to the vehicle and list them down.
Use an affordability calculator to work out how much you’ll allocate to all the costs plus how much you’re able to spend upfront and every following month.
For the monthly payments bit, note that it will include both interest and principal. Factors such as interest rate, down payment, and loan term can affect your monthly payment either negatively or positively.
To save money on payments or if you’re eyeing an expensive ride, wait until interest rates have dropped then make your purchase.
Depending on the vehicle you have in mind, you may have to buy it with a down payment. A great way to handle the down payment hassle is to set aside as much money as you can for it.
Let’s not forget the maintenance costs, insurance premiums, on-the-road-costs such as plates, registration and licensing, fuel costs, and other costs that might pop up.
Jotting down the costs and finding out how much you’ve budgeted for the car helps you make a more financially informed car-buying decision.
10. Strive to be Practical
When going car shopping and buying, it’s always advisable to buy with your head and not your heart.
Be practical. Remember you want a vehicle that’s in good shape and is within your budget. Most luxurious cars can empty your wallet faster than you can imagine.
Even if you can afford a sleek car, you need to ask yourself questions such as: Is it really necessary for you?
Which benefits does it bring to the table? And can you take care of it without straining your daily budget?
If your answer is yes and you’re feeling comfortable about it, go ahead and buy it. If you’re having doubts, no matter how fancy the ride looks, walk away.
The key to being practical, apart from knowing the kind of car you want, is figuring out what you need from the vehicle. Is it a sizeable luggage space? Off-road ability? Or Additional seating capacity?
Once you have the answers, write them down. Leave out those “nice-to-haves” like an 8-inch touchscreen infotainment system and 4 USB ports.
Think of the car buying process as a shopping experience. Before hitting the store, you must have a list of all that you need.
This guides you and ensures that you stick to your budget. Apply this logic when going car shopping.
You Can Get a Cars Today
You’ve decided to buy a car while you’re on a budget and that takes lots of guts. With the proper planning, information, and sacrifice, you can make your dream come true as quickly as possible.
Focus on the positives and whenever you feel that you can’t go ahead with the process anymore, think of the prize that awaits you.
Better yet, have a picture of your dream car so it can motivate you. The stress that you may be going through is just for a while.
Use the tips above throughout the entire car-buying process and you’ll get the car with your budget intact.