How To Save Money When Buying A Car

Are you looking to buy a car but are struggling to find a suitable option on a budget?

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Buying a New Car Today
(Image: Erik McLean/Upsplash)

Buying a car right now is insane. Scarce inventory and dealer markups have combined to make 2021 the most buyer-unfriendly market in decades, maybe even ever. So how can you shop for a car and stay within your budget? It can seem like an impossible task. But familiarize yourself with the following basic tips and tricks and you should prevent yourself from getting ripped off. Heck, you may even score a deal. 

Go Small(er)

If you’ve set your sights on a spacious four-seater or a big four-door 4×4 pickup but will rarely fill the second row and rarely, if ever, go off road, it may benefit you to consider downsizing. This smart reality check will lead you away from high-margin, high-priced trucks and SUVs to more affordable, yet realistically capable, smaller cars that are cheaper to operate, maintain, and live with. 

Buy Last Year’s (or Older) Model

Let’s face it, after a year or two, no one cares if you got the latest and greatest model off the lot. Buying an older car off the lot can often save you thousands off the sticker price.  Bonus, if a particular car is nearing the end of its life cycle or the latest model has recently been announced or launched, the current model’s value is likely to drop in the within weeks, and you may be able to bag yourself a bargain. It may also be worth shopping around at various dealerships to gain a better understanding of how much you should be paying for the older car you have your eye on and, ultimately, find a price you are happy with. By keeping an eye on which makes and models are due to be released and when, you stand to save a great deal of money.

Shop Around for Insurance

An oft overlooked consideration when budgeting for a new car is the cost of insurance. Some makes and models will carry much higher premiums than others. Rates will be determined by the type of vehicle you’re buying (sports car vs. family sedan), the costs of repair (some less-expensive vehicles can actually be quite expensive to fix after an accident), and your driving record. 

It can be tempting to go with the first insurance company that provides you with a quote but by shopping around for insurance, you could end up halving your annual premiums, freeing up money that can go toward a new car payment. If you are buying your first car, you may find yourself wondering what is car insurance and why do you need it? First, in many U.S. States, minimum liability insurance is the law. You can’t register ownership of a vehicle without it. Second, insurance, essentially, prevents you from being hit with a large bill in the event of an accident or emergency on the road. Collision coverage provides you with much-needed peace of mind if you were to the cause of a road traffic collision or weather-related incident, such as a spin-out on an icy or wet roadway.

Buy at the End of the Month

This advice has been shared for decades, because it’s still valid: By buying a car at the end of the month, you could save a considerable amount of cash. This is because dealerships tend to work on a monthly quota-based approach with employees. They will be far more likely to sell you a car for a reduced price at the end of the month when they have sales goals to hit. If you are in no rush to buy a car or are only assessing your options before making a final decision, it may be worth holding off and waiting until the month comes to an end before visiting your local dealership and negotiating a last-minute sale in the hopes of receiving a discount, offer, or promotion.

Keep Your Options Open!

If you are looking to bag a bargain, the single best policy is not to get wedded to one particular make and model. Take a pass on your dream ride, and consider other alternatives that meet your basic criteria—and most importantly—your budget.

If you are in the process of shopping around for a new car, there are a number of things you can do to save money. If you are on the hunt for a car on a budget, it may benefit you to consider downsizing, buying an older make or model, shopping around for insurance, buying at the end of the month, and keeping your options open.