If you’re like most shoppers, you prefer to save whenever and however you can. For many Americans, having a car is an important part of life and essential for travel. A car loan can take up a considerable amount of your budget, so shopping smart is the biggest tool you can have in your toolkit. Learning how to save money when buying a car can be a lot simpler than you might think! Whether you are paying in cash or financing a new or used car, consider these tips to save money the next time you need new set of wheels:
Compare Prices
The biggest mistake you can make when purchasing a vehicle is to only shop in one place. Whether you are starting on Facebook Marketplace, a local dealership, or through an online car financing platform like CarZing, your best ally in this situation is to compare prices. Let’s say that you want to purchase a Honda Civic. According to Edmunds, the market value of a used 2021 Honda Civic ranges from $15,400 to well over $20,000 depending on its upgrades and current condition. Knowing the estimated market value of a vehicle will allow you to shop around more efficiently, regardless of where you are starting from. If you can grab estimated prices off of multiple websites, you can use this comparative information when negotiating with a dealership or a private seller. Although it can be tempting, don’t just buy the first car you like online or on the lot!
Negotiate and Price Match
If you’re searching for a Honda Civic from 2021 in top condition, then you’re likely going to pay anywhere from $18,000-$20,000.
If you see a used model at a dealership going for $25,000, you may be able to get them to price match and lower the price. As a buyer, you need to be prepared to walk away if the price doesn’t meet your budget or your expectations. In some cases, that negotiation tactic will lead the seller to dropping a few thousand dollars from the listing price, so you can get a better deal!
Consider that negotiation doesn’t start and end with the price of the vehicle. Other factors, such as your warranty, maintenance packages, and financing terms may be negotiated as well.
However, keep in mind that some dealerships do not allow you to haggle during the purchasing process. Additionally, some private sellers may not be willing to negotiate with you, so that’s another drawback to keep in mind. Working with dealerships and private sellers may be tedious, especially if you are pushing for the best deal possible.
Know Where to Shop
Speaking of dealerships versus private sellers, there is a drawback to obtaining a used car from a private seller. You will likely not be able to negotiate much, and there are no included warranty or maintenance packages. Additionally, you will need to pay in cash upfront or through a certified check in most cases.
If you need to finance the purchase of your vehicle, you may want to look into only searching for dealership cars or using online platforms to find a new or used vehicle. Financing a car typically means paying for it in regular installments. Installment loans can offer a lot of convenience in that regard, because you will have a predictable monthly payment.
Knowing where to shop is just as important as the car you buy. With a dealership, you are essentially limited to their inventory on site. Through online platforms like CarZing, searching through a huge inventory is a lot more accessible, allowing you to easily navigate different makes and models that fit your budget. You can search for cars based on monthly payment and see rates in real time!
How Much Should I Save For a Car?
It depends. If you aren’t financing a car, then the amount you will need to save increases exponentially. Instead of just saving 20% of the car’s purchase price for a down payment, you will need to have the entire amount upfront – and in cash, in some cases. This may limit your options, so consider whether you have the financial bandwidth to pursue paying cash for a new or used car.
As mentioned above, if you decide to finance the purchase of a car many financial experts recommend putting at least 20% down. That means if you’re purchasing a vehicle worth $15,000, it is recommended that you have at least $3,000 to put down.
When you are able to put down this amount of money, it does significantly reduce your monthly payment than if you only put down $1,000 – or nothing. Essentially, by putting down a larger payment, you reduce the amount you need to finance, resulting in lower monthly payments that may be more affordable in the long run. Additionally, it also means that you may pay less in interest over the life of the loan.
Putting more money down also decreases your chance of going into negative equity, otherwise known as your car’s equity being “underwater”. If your car depreciates faster than the rate you’re paying down your loan, that situation is very unlikely to come out positively. 20% is just the recommended amount, but you can put down less than that.
Understanding How to Save Money When Buying a Car
Ultimately, you need to consider your budget, the terms of your loan, and what your finances will look like once you take on a new debt obligation. In some cases, you can pursue refinancing your auto loan if you aren’t happy with your loan terms later on!
If you’re ready to take advantage of an online marketplace for car financing options, Max CashⓇ can guide you to one of our partners, CarZing! Get real-time lender decisions and search for your dream car today, with no initial impact on your credit score.2 5
