Given how many cars and alluring deals are out there, buying a new car can be daunting, especially when you have a limited budget. Before you head to a dealership to match wits with a car salesman, consider these seven tips to give you a better chance of saving some money.
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The first step when making any large purchase is to take stock of how much you can afford. Consider how much your monthly income is, and figure a reasonable amount that you could afford as a car payment each month. Also factor in the cost of insurance, maintenance, and gas. Your total costs for a car should not be more than 35% of your monthly income.
Before you head into the dealership and take a test drive, learn about the values and deals that are available in your area for the cars that you’re interested in. Learning about prices can also help you find the right make and model for your budget.
It might be tempted to drive off in a car for its cool factor or snazzy style, but make sure it provides the transportation that you and your family need. Consider if the vehicle will be used for commuting, hauling, or transporting children. Think about the weather conditions that you’re likely to encounter and how important fuel economy is for your budget. If you like to do outdoor activities like biking or camping, consider if the car will be able to transport sporting equipment.
Dealers are very savvy about squeezing more money out of a deal when you opt-in for their no-money-down financing offers, but these alluring deals sometimes lead to higher interest rates or large down payments. Shop around at lending institutions for the best interest rate on a car loan before you start talking about financing at the dealership.
The convenience of trading in your old vehicle can make this option very appealing. However, if you’re on a tight budget, you could end up getting more from the vehicle by selling it on your own. However, for many people trading your old vehicle at the dealership when you purchase a new one is too convenient to pass up.
Long-term loans can be helpful to lower your monthly expenses, but you’ll pay more interest and more for the car in the long run. Take the shortest financing terms that you can afford. If possible, try to make all the payments before the vehicle warranty runs out.
Salesmen are trained to close deals on the spot, but you need to know when to walk away or negotiate for better deals. It’s customary for sellers of high-priced items to start off with a price that’s higher than they think you’ll agree to at first, so don’t be hesitant to make a lower counteroffer. Also, it’s wise to verify that the car’s vehicle identification number and history reports don’t raise any red flags.
Buying a new car doesn’t have to be a stressful ordeal if you follow a smart shopping plan. With these basic tips, you should be able to find a new car within your budget without getting fleeced in the process.