(Newswire.net — October 10, 2018) — For most of us, a car is not an optional expense. About 90% of American households own at least one car, and countless Americans rely on their cars to get them to and from work, school, and other social engagements.
But cars are expensive. Even the cheaper ones will cost you tens of thousands of dollars if you buy them new, and high-end vehicles can easily break into six figures. In a country where most of us don’t even have enough in savings to cover an expense of a few hundred dollars, buying a car can be dangerous to our finances. The good news is that It doesn’t have to be. Here are a few ways to be careful and protect your finances when you look for a vehicle to buy.
Use loans wisely
There are two ways to buy a car. One way, of course, is to just pay someone the full value of the car and drive it away once you own it free and clear.
The other option is to take out a loan. Like all loans, car loans can be bad for certain people in certain financial situations. But, in many cases, car loans can be a perfectly healthy and sensible form of debt.
The key is to use loans properly. A car loan should help you pay for the right car for you. It should not be used to inspire you to buy a more expensive car than you actually should. Use common-sense financial rules, like the 20% rule, to determine how much debt you can afford to take out.
Make a budget and stick to it
Knowing how much cash you have on-hand and how much debt you can afford to take out will help you determine what your vehicle budget should be. Think carefully about your priorities and your financial situation and settle on a firm figure. Once you have your budget, don’t budge!
You will be tempted to change your budget. Special offers and salespeople will pressure you, and hidden costs will frustrate you. You’ll feel like you could get a better car if you just paid a little tiny bit more. But don’t give in! If you let your budget migrate upwards, you could end up in a tricky financial situation.
Buy your car used
A new car can be a wonderful thing, but a used car can be a very cost-effective way to get a great ride. This is debatable, of course; some people believe that a new car can be valuable in the long run because, as its sole owner, you can ensure that it gets the best possible care. And it’s certainly true that very old cars can cost you a lot in maintenance and repair costs — so don’t buy a clunker!
But a relatively recent model year of car can represent the financial sweet spot, because you’ll skip the first buyer’s depreciation and still get a great, and relatively new, vehicle.
Shop online
Don’t just go to your local dealership and look at the limited inventory of cars that the place has on the lot. Instead, broaden your search for the perfect vehicle by looking online!
There are a ton of great places to get new and used cars online. Pay particular attention to sites that have buy-it-now options which coexist with potentially money-saving online car auctions.
Don’t be afraid to pick up a car from another location, or have it shipped to you, if the net effect saves you money! Shopping for a car online can be a great cost-saving move, and when you combine it with the right budget and a sensible attitude towards debt, you can use it to buy a car without threatening your overall financial health.