Despite the fact that it may not seem it, owning a car will be a major part of your financial planning throughout your life. And like all financial decisions, it’s important to be a wise shopper and to know how to save money on car expenses.
Although cars are regarded as an asset, it’s important to bear in mind that cars lose value every year because of wear and tear and thanks to the release of new models. Depreciation occurs with every mile driven and with every mile of driving time. As a result, cars are not an investment because they only have a value for a short period of time.
So be smart about your cars. Making sound financial choices about the cars you drive, and the insurance you purchase will equal more money in your pocket over time.
First, let’s look at some ways to save money when purchasing a car.
Tips to save money on your car expenses
Save on automotive expenses is easier than you think. It just requires a little know-how and effort. Check out this list of easy ways you can save!
1. Consider buying fairly used
A new car can lose anywhere between 10 and 20% of its value as soon as you drive it off the sales lot.
Crazy, right? It is because the wholesale price on a car (the price the dealer pays to get the car) is often much lower than the retail price on the vehicle (the price you pay the dealer). When you buy a new vehicle, the difference between wholesale and retail can be substantial.
Curious how to save money when buying a car? Buy used! Purchasing a used car may help you avoid this huge financial difference in order to get a better price. However, buying a used car doesn’t mean one has to purchase an old beater.
A 1 to 3-year-old vehicle in good condition could save you tons of money. And if you take your time to search for carefully, you can find a used car in near-perfect condition. So, buying a new car rather than used can save you a lot of money on car expenses.
2. Know what you are willing to pay in advance
Have a particular car in mind? Do some research before shopping to find out what the typical price of the car is. There are many online tools you can use to make this determination. For instance, Kelley Blue Book and TrueCar.com are superb starting points.
These websites list both the producer’s retail price and the suggested retail price. A general idea of what your car should cost prevents you from being easily swayed by the car salesman’s “suggested” discounts.
3. Know your credit score
Your credit level will determine your interest rate. But it also helps you negotiate the price of the vehicle. Those two things together can save you hundreds or even thousands of dollars in car expenses. One key thing to keep in mind when financing an automobile is that you will end up owing additional money.
Some car dealers might suggest that you buy the vehicle now with any type of credit you have and refinance the vehicle later. This is generally not a good idea unless you’re in a hurry. Set a goal to improve your credit, if necessary, to qualify for the best interest rate possible from the start.
Make sure you buy as much as you can reasonably afford and make payments as quickly as you can. Refrain from spending a lot of interest after making an effort to secure a better price for your services-that is counterproductive.
4. Secure outside financing
One of the smartest ways to save money on automobile expenses is to purchase your financing before visiting a dealership. This can save you a lot of interest compared to what your dealership would be able to offer.
Visit websites like BankRate.com to compare various interest rates. Stop by your bank or credit union to find out what they have to offer. Even a half-percent difference in an interest rate can be a lot of money.
5. Factor the cost of owning a car into your budget
It’s one thing to own a car. But it’s an entirely different matter to be able to pay for it. Owning a car involves purchasing gasoline, paying insurance premiums, and maintaining the costs of your vehicle.
That’s why it’s smart to learn how to save money on car costs. Assess how much these things cost and add them up to your monthly bill.
6. Compare prices on service and maintenance costs to reduce your car expenses
Just because you bought a car at a dealership does not mean that it is the best place to go for repairs. Most dealerships make the bulk of their money in the service department. They are able to do this by offering the service and providing a “guest experience,” but this can cost you a lot of money in padded charges.
Sometimes your service specials cannot be bested. However, you should compare prices when looking for car servicing or regular maintenance visits.
How to save on car expenses by getting the best trade-in value for your old car
Now that you understand some the best ways to save money on an automobile let’s discuss how to cut your costs when you swap it for another. And because most Americans will own ~9 cars, there’s a good chance you will trade in a car at some point.
1. Know the real value of your car
To determine the worth of your vehicle, such as you did before you got your car, you will need to know its year, make, model, mileage, and condition. This may be due to wildly varying mileage and trade-in values.
And when you get offers from healthcare providers? It is always a good idea to compare them against each other so you can get the best deal possible.
Be mindful to include a small markup (e.g., 10% to 15%) on your list price. Private buyers and sellers typically try to undercut your asking price.
2. Spruce up your car
Clean cars are more easily sold and can get you a better trade-in value. Make sure your engine and vehicle are detailed before selling your car. In addition, keeping your vehicle in good shape and serving it often will make it more appealing to a prospective buyer.
3. Be aware of needed repairs
Before selling your automobile, examine all repairs that may be necessary, even if you have no intention of making the repairs yourself. Knowing the cost of these repairs will ensure you get a fair price for your car.
For instance, let’s say the brakes on your car need to be replaced, and a service estimate is $500. But if a salesperson tries to reduce your trade-in price by $1,500 because of the needed repair, you can show them what my service estimate will be.
4. Separate your trade-in negotiation from your next car purchase
If you approach a dealer to acquire your new vehicle, it is in your best interest to negotiate the price of your trade-in beforehand instead of incorporating it into the sale price of your next vehicle. By doing this, you will know exactly what you are being offered and can verify that the figure is truly appropriate.
It is simple for the value of a trade-in to get significantly discounted (or lowballed) when it is tied into the purchase of a new car. It might feel like you’re getting a good deal because you’d be receiving a discount on the car you are buying. However, a closer look might reveal inaccuracies.
Reduce car expenses by getting a better insurance rate
Now you can know how to shop for a used car and buy and sell a car to lower your costs and save more money.
Don’t forget to include car insurance in your budget. Because most plans have you pay premiums twice per year instead of monthly, it is easy to forget this expense. Including it in your budget will protect you from having to put your car insurance on a credit card.
Thus, shop around for the right auto insurance rates you can find. Getting an excellent deal on car insurance is like buying a car; you should shop around to find the best cost. If you want to find the lowest rates for automobile insurance, you need to comparison shop between insurers to find the best price.
These are just a few of the ways to save on auto insurance:
1. Revisit your limits and deductibles
You can reduce your out-of-pocket expenses by decreasing deductibles and raising maximums. However, that can cost you more money in the event of an accident or theft. I advise keeping the minimum auto insurance policy only if you cannot afford more or you drive infrequently.
It may be tempting to reduce your car insurance costs by reducing your coverage, but consider the cost you’ll incur if your car is involved in an accident!
2. Identify discounts to reduce your car expenses
Insurance companies offer a variety of discounts. However, many of these special offers are overlooked and unused. Don’t wait for your insurance company to tell you which discounts they offer. It’s up to you to ask.
3. Mention life events to your insurer
Did you get married? Have a child? Move to a city with excellent public transportation? Many companies consider these events in a beneficial light in regard to risk, so they will often offer discounted rates. As such, they are usually eager to hire you.
Save on car expenses by finding the best deals on car insurance
So now you know how to set up the insurance plan, but how do you find the best plan price? We’ve compiled some vital tips for locating the best rates.
1. Bundling
Buying more than one car on a single policy or purchasing your car insurance from the same company that provides your home or life insurance may result in savings of up to 30 percent.
2. Adding safety features to your car
Buying or installing cars with safety features like anti-theft systems can help you save money on your car insurance. Be sure to ask your insurance company about the particular savings available with any car bought or installed with safety features.
3. Taking defensive driving courses
Some insurers will discount your premiums by approximately 10% for taking a cautious driving course. This not only saves you money by reducing your auto expenses but also improves your driving safety.
There are many ways to save on car insurance, but it is essential to know which companies provide the most affordable premiums for you. Insurance costs depend on numerous factors, such as sex, age, and driving history.
As a female, you already have an advantage in getting better deals on car insurance. However, you don’t have to stop there! You can save a lot of money by purchasing car insurance in the right place and taking advantage of all the available discounts.
Use these tips to save on car expenses
By using these strategies, you can save a great deal of money on vehicle expenses! When buying a used car instead of a new one, you can find a great insurance deal, get the best trade-in value when you do decide to upgrade, and save even more by purchasing your next car used.
Create a sinking fund for planned repairs and an emergency fund for unforeseen problems to cover automotive expenses without racking up debt!
