After a house, the most expensive thing you’ll ever buy is a car. And while a house might go up in value over time, a car will eventually become a nearly worthless piece of metal, plastic, and upholstery. As per Kelley Blue Book, new cars cost about 5.43% more in 2021 than they did in 2020. The average car costs about $41,263.
As car prices continue to go up, it’s important to come up with ways to get the best car for the best price. Most finance experts will tell you to repair your credit prior to getting pre-approved for an auto loan or pay for your car with cash, but there are other things you can do. Here’s how to buy your next car for less.
Buy a Used Car
The Automobile Association says that a new car loses value as soon as it’s driven off a dealer’s lot. And by the end of the first year, it loses around 40% of its value. If you do 10,000 miles a year, the car will have lost around 60% of its value by the third year.
So, it makes a lot of sense to buy a used car. You save money and still get a valuable car. But if you’re thinking of buying a car that’s only 1 year old, it may be more affordable to buy a new car in some cases–especially if you factor in dealer and manufacturer incentives.
Do Your Homework
Whether you’re buying a new car or a used one, do your homework first. Research the prices and options for the cars you’re eyeing. Research is one of the most important steps in car-buying and takes the longest time (in most cases). Research different options, evaluate them, then choose the best one.
Research also helps you to know the car prices, and the price will determine what kind of car you will purchase. You’ll also have to factor in the price of fuel, maintenance costs, and auto insurance to get the true cost of the car you want to buy.
Consider Leasing
Leasing a car makes more sense than purchasing in some circumstances. The most important factor is your average annual vehicle miles. If you don’t do more than 15,000 miles a year, leasing might be a good option. When you lease a vehicle, you rent it from the dealer for a period–usually 36 or 48 months. Once the lease period ends, you can return the vehicle to the dealer or buy it at a predetermined amount.
Leasing a car also means worry-free maintenance. Since most new cars come with a 3-year warranty, if you take out a three-year lease, many of the repairs will be covered. To determine how much you’ll pay each month, use a lease calculator. You’ll also know the effective interest rate on the lease.
Time your purchase
Buy the car at the end of the month because most salespeople are trying to meet their quotas or qualify for a bonus. Also, be aware of the seasonal trends in your area as they hugely affect car prices. For example, four-wheel-drive trucks are usually in high demand in winter but cost less in summer. Some jeeps and convertibles are cheaper in the fall.
