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How To Obtain Your Dream Car While Saving The Most

Like a home, everyone wants their car to be the best. However, people end up overspending for a vehicle that may only be good for a few more years…

Ever feel like you spend way more on your car than you intended? You’re not alone. Car dealerships are the experts of persuasion, and it’s easy to get caught up in the excitement of a new vehicle and overshoot your budget.

I mean, it’s their job to sell, right?

But why exactly do people consistently overspend on cars?

There are a few main factors that contribute to this phenomenon. Firstly, cars are often emotional purchases and considered as a discretionary expense. That shiny new SUV might seem like the perfect fit for your family adventures, clouding your judgment on the true financial impact.

Secondly, dealership tactics can be shrewd. Financing options might be presented in a confusing manner, making it difficult to grasp the total cost of ownership. Finally, the pressure to close the deal can be immense, leading you to agree to terms that aren’t ideal for your wallet.

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The numbers back up this trend. According to a survey by Cox Automotive, a whopping 39% of respondents admitted to spending more than they planned on their car! So, next time you’re in the car buying arena, be mindful of these factors and prioritize sticking to your budget for a smarter financial decision.

Buying a car is an absolutely massive financial decision. While the excitement of cruising around in a new vehicle is undeniable, the price tag can cause some serious sticker shock. However, with a strategic approach, you can save a good chunk money and find a car that perfectly suits your needs.

i. What Are Your Needs & What Is Your Budget?

Before setting foot on a dealership lot, ask yourself key questions…

  • Will this car be used for daily commutes, weekend adventures, or hauling a growing family?
  • How much cargo space do you need?
  • What fuel efficiency is important to you?

These factors help narrow your search and prevent you from being swayed by features you don’t truly need.

Once you have a clear understanding of your needs, establish a realistic budget. Take into account not just the purchase price, but also ongoing costs like insurance, maintenance, and gas.

A good rule of thumb is to allocate no more than 10% of your monthly take-home pay for a car payment. Utilizing online car-buying calculators or budgeting apps can help you determine an affordable monthly payment based on your budget and loan terms.

ii. Through Research On What You Want

Knowledge is power, especially in the car-buying arena. Arm yourself with information about the specific makes and models you’re considering.

Online resources like Kelley Blue Book (KBB) and Edmunds provide valuable insights on used car values, reliability ratings, and ownership costs. Read car reviews from reputable sources to gain a comprehensive understanding of a vehicle’s performance, fuel efficiency, and safety features.

Don’t underestimate consumer reports. Organizations like Consumer Reports offer in-depth car reviews based on road tests, reliability surveys, and owner satisfaction. These reports can be invaluable in identifying potential problem areas and ensuring you’re making a sound investment.

iii. Consider Both New & Used Cars

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New cars offer the allure of the latest technology, features, and a factory warranty. However, they also come with a hefty price tag that depreciates significantly the moment you drive it off the lot. Used cars, on the other hand, present a more budget-friendly option. You can often find gently used cars a few years old with low mileage at a fraction of the cost of a new one.

The key to success in the used car market is thorough research. Obtain the car’s history report through services like Carfax or Autotrader to identify any accidents, major repairs, or outstanding titles. Schedule a pre-purchase inspection with a trusted mechanic to uncover any potential mechanical issues before you commit to the purchase.

iv. Financing vs. Full Payment

There are two main ways to finance a car purchase: paying in full with cash or taking out a loan. Each approach has its own set of advantages and disadvantages.

Paying in full upfront eliminates the burden of monthly car payments and interest charges. It also allows you to negotiate a lower purchase price with the seller since they won’t be profiting from financing fees. However, this approach requires a significant upfront investment that could limit your financial flexibility in other areas.

Financing a car allows you to spread out the cost of the vehicle over a period of time. This can be more manageable for your budget, especially if you’re buying a more expensive car. However, you’ll end up paying more in the long run due to interest charges.

So, which option is right for you?

If you have the savings to pay for the car upfront and prioritize saving money on interest, then full payment might be the better choice. However, if your budget is tight or you prefer to keep some cash reserves, financing can be a viable alternative. The key is to shop around for the best loan rates from banks, credit unions, or online lenders before finalizing your purchase.

v. Negotiation

Don’t be afraid to negotiate the price! The sticker price on a car is often just a starting point. Come prepared with research on the car’s fair market value and be willing to walk away if you don’t get a deal that aligns with your budget.

Be polite yet firm in your negotiations. Consider offering a lower price based on your research or pointing out any minor cosmetic blemishes on the car.

If the dealer is unwilling to budge on the price, inquire about potential add-ons or extended warranties that they might be willing to include at a discounted rate.

Questions, Comments, Concerns?

What is your dream car?

Is it in price range?

I would love to hear about it, so feel free to share below!