June, 2022

Essential Tips for Car Shopping on a Budget

It’s easy to get caught up in the excitement of buying a car. However, purchasing a vehicle is a big investment and not something you want to rush into. Many car dealers have a reputation for acting like your friend to try to convince you to buy a car that’s potentially above your price range. But you don’t want to get saddled with monthly payments you can’t afford. Make saving money a priority when you follow these tips for car shopping on a budget.

Consider Buying a Used Car

New cars lose value as soon as you drive off the lot. After a year, your new car has lost 30% of its value.¹ Used cars, on the other hand, depreciate at a slower rate. This can be to your advantage when you buy a used car, since you can essentially purchase a better quality used car for the same price as a new one.

Know What You Can Afford

Before you head to the dealership, take time to determine how much you can afford to spend. A good strategy is to dedicate no more than 10-15% of your income to your vehicle purchase.² This includes all your car expenses like, your monthly payment, financing, registration fees, licensing and insurance.

If you’re trying to figure out how to save up for a car, use this percentage to work backwards and calculate how much money you’ll need when budgeting. Then, set up a savings account dedicated to your future vehicle and start making regular contributions.

Wait for the Holidays

The end of the year is the best time to buy a car, as dealers are working harder to hit their annual sales goals.⁵ Big sales and price reductions are more common during October, November, and December, particularly around Black Friday. If you can’t wait, consider buying on a Monday or a major holiday.

Do Your Research

The sheer amount of information online means you never have to be caught off guard. By doing some research ahead of time, you can find a lot of detailed information about the vehicle you want, the price you can expect and how you can pay for it. Don’t be afraid to shop around at different dealerships and compare pricing information. After you gather some initial information online, head to a few dealerships to ask questions and test drive the cars you’re interested in.

As you research, consider all the costs of ownership, not just the cost of the car itself. Gas, insurance, and maintenance will need to factor into your ongoing car budget as well.

Do the Prep Work

If you’re buying a used car, look up a vehicle history report. This will tell you about past ownership, accidents, and repairs. Getting a pre-purchase inspection is also a good idea when buying a used vehicle. With this you’ll get insight into any potential safety concerns or mechanical issues, which can save you a lot of money in the long run.

Negotiate Car Price

Car prices are not set in stone. In fact, car dealers expect you to negotiate to get the best possible deal. Start your negotiation with a price that’s below the maximum amount you’re comfortable spending so that you have room to bargain.³

Don’t Trade In

If your goal is saving money, it’s best not to trade in your car when you’re buying a new one. You’ll make a greater profit by selling your car on your own. Another downside of trading in your vehicle at the same time as purchasing a new one is that it can make it more confusing to know if you’re getting a good deal. It’s easier for car dealers to upsell you on your new car and lowball you on your old one in a single transaction.⁴

Online Payday Loans

Having adequate transportation is a necessity for many of us. If you’re struggling to save money for a car or need help with emergency transportation, consider an online payday loan from LendNation. Our speedy application and approval process gets you your money quickly and conveniently. Stop stressing about budgeting and contact LendNation today to find a loan option that works for you. We offer a variety of loans products to help solve your financial needs. Let the customer service team at LendNation help you today!

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