In addition to being a beautiful time of year, spring is often a popular time to purchase a vehicle, especially this year. Research from Cox Automotive® shows new and used vehicles sales have increased since March.
If you’re considering buying your next car, use the following eight strategies to make a wise decision and save money.
- Look at vehicle reviews.
Make sure a potential vehicle will fit your priorities, such as having enough room for the entire family, feeling comfortable on long trips, or being compact enough for city driving. Compare features and prices of different makes and models that interest you and build a test-drive list.
You can find vehicle test results, survey findings, and consumer ratings at Consumer Reports®.
- Know what you can afford.
Before shopping for a car, deciding how much you can afford is critical. A good rule of thumb is to keep your car payment at no more than 10% of your net pay. So, if your take-home pay is $4,000 per month, your car payment should be close to $400.
You can get help crunching the numbers by using a Car Payment Calculator. See how different down payments, terms, and finance amounts affect your payment. But remember that you’ll also have other expenses to cover, such as fuel, charging, insurance, maintenance, and repairs not covered by a warranty.
Buying a used vehicle is one of the best ways to reduce the cost of your next car. Data from Kelley Blue Book® shows that average used car prices are about 50% less than average new vehicle prices.
Listen as Laura interviews Jessica Tavares from Enterprise Car Sales about ways to purchase a car for less and have a better buying experience. Find the full interview and transcript or listen in the player below.
- Check your credit.
Once you have a price range in mind for your vehicle, review your credit. Auto lenders rely on credit when setting your annual interest rate offer. The better your credit, the lower your interest rate and monthly payments will be.
- Research your financing options.
While you can typically apply for financing in a dealership, check with your bank or credit union to see what it offers. To reduce your finance charge, shop for the shortest financing term you can afford, reducing the time you pay interest.
- Start with as much equity as possible.
The more you can put down on a vehicle, the lower your monthly cost will be. A higher down payment also helps you avoid becoming “upside-down” on a car, where you end up owing more than it’s worth. That’s critical because if you sell a vehicle before paying it off, you must make up any difference between its sales price and any remaining financing balance.
In addition to giving you more vehicle equity, making a larger down payment reduces the amount of your monthly payments or allows you to shorten your repayment period.
- Buy from a reliable seller.
Buying from a seller you trust can give you peace of mind and make for a more enjoyable shopping experience. You have many options, including individual sellers, traditional dealerships, and online retailers. Buying a car in person is still popular, but you can buy one in some states without stepping inside a local dealership.
There are hybrid car purchasing options as well. For instance, Enterprise Car Sales offers a variety of nearly new vehicles, which are often one to three years old, for sale online and locally. You can start a purchase online and finalize it at one of their dealerships across the U.S.
Ensure a vehicle’s price is presented clearly upfront and consider taxes, fees, and other costs. Some dealers, including Enterprise Car Sales, offer transparent pricing, which makes it easy to understand and compare car prices.
- Find a high-quality vehicle.
No matter where you buy a vehicle, it’s a good idea to test drive it when possible. One benefit of buying a car from a dealership is that most offer extra benefits like a vehicle inspection and a limited warranty. Vehicle repairs can be expensive, so finding a reliable vehicle and protecting your purchase is essential.
For instance, Enterprise Car Sales’ vehicles pass inspection by ASE-certified technicians. Plus, they provide a 12-month or 12,000-mile (whichever occurs first) limited powertrain warranty, 12 months of roadside assistance, and a 7-day return policy.
- Shop your auto insurance.
If you already have auto insurance, update the coverage immediately after buying a car. Some policies include a grace period, such as 30 days, when any new car is automatically covered. Since a vehicle’s make and model affect your auto insurance premium, your rate could go up or down.
When buying your first car, you must purchase auto insurance before driving it. Since each auto insurer evaluates you differently and offers various potential discounts, compare quotes with multiple companies. Shopping for the best coverage at the lowest price saves you money.
Laura Adams is a personal finance expert, host of the “Money Girl” podcast, and a paid Enterprise Car Sales spokesperson.