Whether you choose to cruise in a big truck, flashy convertible, or conservative sedan, a vehicle is a significant expense. Here are some smarty tips to keep in mind when saving for a new ride.
Let Your Fingers Do the Walking
When thinking about a new car, it’s a good idea to begin your research online, where you are more likely to maintain your focus and budget. You might start by looking at your dream car, but it’s essential to consider all available options and select the most practical option for your current situation.
The most common factors to keep in mind are the year, make, and model of the vehicle. New cars are in short supply and the most expensive option. A used car is an economical option, but remember that vehicles with the lowest mileage will likely have the highest price. A good rule of thumb for used cars is under 10 years old and less than 100,000 miles. If you buy new, try to hold off on making your purchase until the end of the year, when the price is more likely to decrease as dealers make room for next year’s models.
When evaluating the makes and models, remember that all major manufacturers produce a similar selection of vehicles, so be sure to expand your research to more than one manufacturer. The more optional features included, the more the vehicle will likely cost. Think about if you really need all those bells and whistles.
Keep Your Feet on the Ground
Whether you are ready to make a purchase now or are just laying the groundwork, ensure you keep cruising toward your financial goals by having a realistic budget for your auto purchase.
Begin by checking your credit score. Here are some tips for building and maintaining good credit.
Estimate the cost of your new car with tried-and-true resources like the Kelley Blue Book (KBB). You can view prices for all years, makes, and models and even narrow your search to dealerships in your local area. You can even research the value of your trade-in!
When it comes to selling your current ride, retailers like CarMax and Carvana offer speed and convenience, but private sales usually provide a higher profit.
Finally, consider what funds you have available for the down payment, typically about 20% of the purchase price. While you may find a deal with a lower or even no down payment, this will likely increase both your interest rate and the monthly loan payment, costing you more in the long run.
Keep an Eye on the Extras
The cost of the vehicle isn’t simply the amount at the point of sale. There are ongoing and future expenses that should be factored into your planning. To avoid surprises down the road, evaluate delivery fees, preparation fees, warranties and sales tax on the vehicle, cost of registrations and inspections, changes to your auto insurance policy, and ongoing maintenance and repairs.
Ride off into the sunset, knowing that you’re taking all the right steps to accelerate your savings and steer toward your savings goal of a new car!