Many businesses are working to reduce the financial impact on consumers due to Trump’s tariffs on China’s imports. However, they are still feeling the significant financial burden, which ultimately affects what consumers will pay, especially for automobiles. Purchasing a car is projected to get even more expensive. So, if you are in the market to buy a vehicle, get these three things done first to save when buying a car.
3 Ways to Save When Buying a Car
Get Pre-Approved
Before shopping for your next vehicle, the first question to answer is, “How much I can afford?” Do not allow the dealer’s finance department or bank to tell you how much you can afford. The reality is they both want you to borrow and spend as much as possible to increase their income. Most people shop for a vehicle and then rely on the dealer to secure financing. Financing through the dealership can be costly because it will be based on the cost of the car as well as the best deal the dealer will obtain from the financier.
To avoid an expensive payment that may become a financial hardship, get pre-approved for a loan based on the payment you can afford based on your budget. Once pre-approved, you will know how much money you will have to shop for a vehicle. This will also eliminate numerous financial institutions pulling your credit file, as well as minimize the chance of being lured into an overpriced car.
Get Prepared
There is nothing like the “new car” smell. It can be intoxicating as you test drive your dream car. So, get prepared by knowing these numbers.
Online car-buying sites like Vroom, Carvana, and Shift have inventory available for viewing online. Understanding the market price for vehicles will help you decide the best car for your budget. Once you have identified your desired vehicle, check the value of the vehicle using NADAguides or Kelley Blue Book to find its value. Also, use these sites to check the trade-in value of your car used toward your next car purchase. This information will be valuable when it comes time to negotiate.
Get Pre-Owned
The thought of being the first person to purchase that new vehicle can be exhilarating. However, when purchased new, a car loses at least 10% of its value when driven off the lot. Vehicles lose over 45% over the first three years of ownership, which means the value of the car will be less than the amount financed—called ‘negative equity.’
Buying a used or pre-owned vehicle with low miles gives you the vehicle you want, holds its value better, and can save you up to a few thousand dollars.
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