Buying a car is a big financial decision that you don’t want to rush into. And the more you know about the process, the more likely you are to get a good deal (instead of ending up with a hunk of junk or completely wrecking your finances).
Use these 10 tips for buying a car to help you find a reliable ride you can actually afford!
10 Car Buying Tips
1. Figure out your car budget. 2. Narrow down your choices. 3. Do your research. 4. Get a car insurance quote. 5. Take a test drive. 6. Get a car inspection. 7. Know the best time to buy a car. 8. Always negotiate. 9. Ditch the expensive extras. 10. Bring someone with you.
Reality check: Brand-new cars drop in value like a bag of rocks, losing 60% of their value in the first five years!1 In other words, you should only consider buying a new car if you have plenty of money to burn. Our rule of thumb: Unless you have a net worth of $1 million or more, choosing a used car over a new one is the smart thing to do.
With that out of the way, you need to decide how much you can actually pay for a car. Going into debt to buy one is a horrible idea, so go ahead and take getting a car loan off the table. That means the car you can afford is the car you can pay cash for up front. Not only is it possible, it’s also the best way to by a car, hands down!
If you don’t have the funds to buy a used car right now, you’ll need to save up. Start by creating a budget. Then, find ways to lower your expenses so you can put money toward a car fund each month. (If you’re buying a car for your teenager, this is a great time to get them involved!)
Remember, leasing or financing a car will not help you build wealth. It’s much easier to save around $533 a month (the average used car payment) for 10 months and buy a used car with no strings attached.2 Do you really want to sign up for years of car payments and pay thousands of extra dollars for several years? Of course, not—you’re smarter than that!
Once you’ve decided on a price, start looking at cars that fit your budget. There are plenty of places to find used cars in your area. Your local dealership likely has a website for you to view the used cars they have in stock. And you can check sites like Craigslist to see what other cars are on the market.
Then, narrow down your options to a few cars that fit your price range and needs. Consider factors such as safety, speed, gas mileage, comfort, and how it handles in bad weather.
You may love that sporty-looking sedan, but you know in your heart a mini-van is the only thing that makes sense for your family. Remember, just because something is a good fit for your wallet doesn’t mean it’ll work for your lifestyle—so be realistic.
When you find a few cars you like, you still need to do some more research and ask the right questions before you’re ready to buy. Look up the Kelley Blue Book value of the vehicle to make sure the price is fair for that year and model.
You should also check each vehicle’s history report. This will tell you the accident history, repair information, potential recalls, and other important information about the car. Simply request the Vehicle Identification Number (VIN) from the seller and use a website like VehicleHistory.com or Carfax.com to research the car’s history.
Some sites charge for the car information they provide. But while paid reports may be more comprehensive, free reports will alert you to any major red flags. Some car dealerships or private sellers will also provide a report if you ask. Either way, it’s worth a check—because if you get a good deal but end up in the shop every week for maintenance, you’ll spend more money in the long run.