Last Updated on March 20, 2024 by Nasir Hanif
Buying a car is no small endeavor even without consideration for the cost. There are so many moving parts in the car-buying process that it’s easy to get overwhelmed. Still, figuring out the financing can be challenging because of how expensive owning a car can be. When it’s time to look for some new wheels, be sure to take these steps so you can afford them.
Table of Contents
1. Set Up a Credit-Building Plan
Car purchases, being as costly as they are, often require loans for people to afford. You can’t get a loan without good credit, and you may not be able to move forward without one. You can prevent this by setting up a plan to build your credit in advance. Making timely credit card payments, paying off debt, and using a credit builder card are all options to help you build credit.
It’s optimal to start doing this as early as possible so you can get the loan when you need it. Credit takes a while to build, but once you’re in a good range, it will be well worth it. A good credit score can help you secure lower interest rates and better payment terms.
2. Establish a Budget and Stick to It
Expecting yourself to spend responsibly in this economy without creating a plan to do so is unrealistic. You can only keep track of so many expenses at once, so take the time to establish a simple budget. You can be as specific as you want to be, creating spending categories to fit your lifestyle.
Having a budget will make it easier to set aside future funds. By adhering to a budget for months or longer in advance, you have more time to save for your car.
Budgeting is good practice regardless — you can apply this advice to anything you want to save for. Make some financial rules and follow through with them so you have more freedom later on.
3. Take Potential Expenses Into Account
During your search, the first criterion for a potential car is whether you can afford the price tag. But remember that owning a car comes with a host of other expenses, too. Along with the vehicle itself you need to be able to afford insurance, maintenance/inspection costs, gasoline, etc. A truly affordable price range may differ with these elements in mind, so look into them and set your expectations in advance.
The period when you’re developing your budget is the best time to take these considerations into account so you can properly prepare. This will make the process much more straightforward in the end because you’ll know exactly what you can afford.
4. Familiarize Yourself With the Negotiation Process
This is the part of the process most people dread — negotiating with the salesperson. The fear of not getting the best deal you can (or being taken advantage of) is real and possible.
Make sure that you have done your research before going into the purchasing process so you know how to navigate the situation. Not only will it improve your strategy (knowing exactly what you want), but you won’t be as nervous going in.
Most importantly, don’t begin the process with a car you couldn’t already afford without a better deal. Even if your confidence does falter, you still won’t have to worry about the financial consequences.
5. Time Your Purchase
One of the benefits of preparing for a car purchase in advance is that you can time it strategically. There are specific times of the year during which prices are likely to be lower based on a variety of factors. End-of-year sales events are a way for dealerships to sell more of the current year’s model before new inventory arrives. These cars will cost you much less in December as the dealership makes way for next year’s models.
Alternatively, you can also see whether timing your purchase based on the end of a financial quarter will help. As the quarter ends, salespeople will be looking to fill their quota — which may mean a deal for you!
6. Learn the Basics of Vehicle Maintenance
It goes without saying that you’ll save a bundle if you can fix a problem yourself versus visiting a repair shop. Learn everything you can about potential issues, and teach yourself how to do basic things like oil and tire changes. Not only are they simpler than you’d think, but they’ll save you the hassle of going to the shop. Plus, if there’s ever a mechanical emergency, you’ll know a little bit about what you can do to address it.
Some people take this approach even further and buy old, nearly dead cars on the cheap to improve themselves. While a substantial time investment, it is certainly possible for you to go this route if money is tight.
7. Look Into Buying Used
Another good idea lies somewhere in the middle — searching for a used car and being open to minor problems. In terms of the financial investment, used cars depreciate in value slower and often cost much less from the beginning. The best part is that anything previously purchased when new qualifies as “used,” even if it was barely driven. You might find a “like-new” car identical to a new one but at a much lower price.
This cost difference also means that you’ll either need a smaller loan or none at all. By buying used, you have many more options at your disposal without breaking the bank.
The car-buying process is complicated to prepare for on paper, but once you’ve begun it will come a little more naturally. You’ll quickly become more familiar with your finances and needs for the future. Eventually, you can apply these tips to other big-ticket purchases, like a new home. But for now, your car is just a few steps away.
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