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How to Save Money on a Car
Owning a car can be a significant expense that eats into your bank account each month. Aside from the upfront purchase, you also have to worry about long-term expenses associated with maintenance, gasoline, and insurance coverage. Worry not – there are many strategies you can adopt to minimize costs. Below, we discuss the best time to buy a car, money-saving features, and more. With these tips and tricks, you can avoid paying too much, while staying on the road with a car that meets your needs.
The Best Time to Buy a Car
Many people consider the sticker price of a car as more of a starting point for negotiation than a fixed value, but the amount you’ll be able to shave off the price could depend heavily on when you decide to do your shopping. Consider the following three factors before planning your trip to the car lot.
Shop at the Beginning of the Week
Since most people go car shopping on the weekend, showing up on the lot after the weekend rush holds the possibility of deeper discounts. With fewer customers around, salespeople can focus more on you, and they are more likely to offer discounts to keep sales up through the slow days. Monday has historically been considered a choice day since many people are at work and the lots are likely to be empty, but an analysis of 2018-19 data by TrueCar showed that, in states that allow Sunday sales, Sunday is also a good day to buy a car.
Shop at the End of the Month and at the end of a Quarter
You’ll probably have a better shot at getting the best deal if you buy near the end of the month. That’s because the dealers are trying to meet their sales quotas and earn bonuses before the end of the sales cycle. According to Kelley Blue Book, the best strategy is to start checking out cars between the 16th and 20th of the month, and close the deal on the last two to three days of the month.
Wait for Inventory Purges
New car models attract buyers who want the latest and greatest features in their automobile, but settling for the current year’s model can save you substantial money. Dealers need to find room for those new models on the lot and that means moving the old inventory as soon as possible, and at a discount. The timing for new models varies but can generally be expected in summer or autumn, which means the later months of the year are best for grabbing deals. With the end of the year – and those end-of-the-year bonuses – on the horizon, dealerships will want to clear out old inventory and hit their yearly goals, making December and New Year’s Eve one of the best times to buy.
Factors to Consider Before Buying a Car
It’s easy to compare the upfront costs of different cars to find the best deal for the features that you want, but be careful not to overlook the secondary costs that come with owning a vehicle. These extra costs aren’t necessarily apparent at first glance, but significantly contribute to your transportation expenses in the long run. Consider the following three items before you drive off the lot with your purchase.
Car Condition – New or Used
A used car is less expensive outright, but can see maintenance costs right away, while a more expensive new car under warranty might not see any maintenance costs or major repairs for years. In a study done by Consumer Reports in 2019, yearly maintenance costs increased drastically at the ten-year mark when compared to costs associated with three- and five-year-old models ($458 versus $83 and $200, respectively). It’s not all about maintenance cost either – many factors can come into play, like depreciation (one of the largest costs associated with owning a car, according to U.S. News & World Report) and interest rates on loans (averaging 6.1% for new cars versus 8.7% for used cars, according to Edmunds data in 2019). Factors like how much cash you have on hand, your eligibility for financing, and the size of monthly payments you can afford might ultimately make the decision for you, but keeping long-term expenses in mind can help you avoid unplanned costs down the road.
While the visual features of your new car may grab your attention first, considering less obvious benefits like gas mileage can save money over the life of the car. Think about how much it will cost you to fill up, how often you will use it, and how many miles per gallon it’s rated for. If you want to maximize your savings on gas, consider going with a hybrid automobile that won’t require you to fill up as often or an electric vehicle, which according to the Office of Energy Efficiency and Renewable Energy, costs less than half as much on average to operate over the same distance as a gas-powered vehicle.
A great way to save money on your car expenses is by going without one. Depending on your access and ability to take public transportation, ride a bicycle, walk, or use ride-sharing services like Uber or Lyft, you may want to consider ditching the car altogether. Back in 2017, the American Public Transportation Association found that, on average, a person could save almost $10,000 per year by commuting with public transportation instead by car. You’ll still spend money on transportation, but depending on your habits and transportation needs, you may find living without a car to be less expensive than owning and operating a motor vehicle in the long run.
Saving on Car Expenses in the Long Run
Saving money on a car means more than just bargaining at the dealership. Your driving behaviors and maintenance habits can have an impact on costs in the long run, too. Consider the following three factors throughout the lifetime of your car.
Car Insurance Discounts
Car insurance isn’t cheap, and although there isn’t any way around having it, you can take steps to make your coverage more affordable. Almost all of the major providers offer some combination of the discounts and coverage options for their policies. Be sure to shop around for the best quote as premiums and discounts can vary, and some companies may be able offer a substantially lower cost than others. Below are just a few money saving options to consider, with projected savings calculated by Forbes.
- Clean driving discounts: A record without accidents, speeding tickets, or other traffic infractions can indicate you are a lower risk, meaning you can get lower rates (between 10% to 40% lower) on your policy and potentially increased savings over time with the same insurer.
- Usage discounts: Less time on the road means a smaller chance of getting into an accident, and so does good driving. Some insurance companies let you use a mobile app to track your driving statistics and give discounts (5% to 40%) to drivers based on the data collected.
- Safety feature discounts: Safety features can get you big discounts (up to 40%) on medical payment or personal injury coverage, so when you’re talking to the salesman, remember to ask about airbags, automatic seat belts, anti-lock brakes, electronic stability control, and any other components that make that vehicle safer on the road.
- Anti-theft device discounts: Storing your car in a garage instead of on the street can save money on premiums. But even if you don’t have that option, an alarm system with an ignition cutoff switch that prevents your car from being stolen can also lower your costs (5% to 25%).
- Lump sum payment discounts: It might be more manageable to pay on a monthly basis, but insurance companies will reward upfront payments for 6 to 12 months of coverage at a time with discounts (about 10%).
- Coverage options: Examine your policy to see if you can eliminate unnecessary components while maintaining sufficient coverage for your situation. Things like roadside assistance and rental car coverage may be more expensive to keep on your policy than paying the cost out of pocket.
- Deductible options: Your deductible is the money you have to pay up front before your policy kicks in and covers your loss. The more you agree to pay in the form of a deductible, the lower the cost of your policy. Consider how much you can afford to pay out of pocket should something happen to your vehicle and then choose a deductible that reflects your budget.
A smart way to keep your maintenance costs down is by keeping the car in clean, proper working order. That means following through on routing upkeep like getting regular oil changes (every 3,000 miles for older cars or every 5,000-7,500 miles for newer cars, according to AAA) and having the wheels aligned and rotated to encourage even wearing and increase life span.
Opt for lower octane gas at the pump. It can cost as much as 60 cents less, and it’s likely you won’t need to pump premium unless your owner’s manual specifically recommends it. Also consider paying with a credit card if your card offers cash-back rewards card. Many cards offer anywhere from 2% to 5% back on purchases made at gas stations.
Owning a car is a major expense, but there are ways to minimize the costs to your budget, both upfront and in the long run. Everything from time of the month you buy and the features you choose, to how you take care of your vehicle can have an impact on your overall savings. Even going carless can pay off for some people. In the end, managing what you want with what’s best for your budget is the key to saving money on your car.