How to Buy a Car on a Budget
Whether you’re buying a new car or saving up to afford your first, when it comes to buying a car on a budget, there is a lot to think about. The price you see on the sticker likely will not be the final dollar amount that the car will cost you. Over time, small costs add up and what seems like a sound purchase now could cost you big further down the road. It’s easy to get caught up in the excitement of buying a new car and that can lead to you making concessions you might not otherwise make. That’s why Compare.com has come up with the top three things to consider when buying a car on a budget.
Should You Buy New or Used?
Believe it or not, there are people out there who still think that buying a car is an investment. It’s not (unless it’s a Ferrari). Buying a new car sure feels (and smells) really good, but even cars widely held to “retain their value”, depreciate an average of $5,000 in the first year alone.
If you’re buying a car on a tight budget, purchasing a brand new car may be out of the question. That being said, you’ll be making a more sound financial decision if you choose a used car.
What Are the Maintenance Costs?
In the good old days when you purchased a car you had an idea of what maintenance tasks you could handle yourself (windshield washer fluid top-up) and which tasks would require professional assistance (gearbox replacement). Changing headlamp bulbs, for example, used to be a fairly simple procedure. Today, some vehicle models require body panels to be removed and may even require specialist tools. As more cars are electronic, figuring things out on your own simply won’t work for many modern cars. Cue: the garage visit…
Remember, your local mechanic is paid hourly, plus the cost of parts. If changing a headlight involves that much work, it will take more time … and that’s an added cost. Also, don’t be afraid to ask your salesperson (or research online) about other unusual maintenance costs. For example, some sports cars require a specific type of tire and those tires need to be replaced more often than normal tires. Maintenance costs like these can make an affordable car become an expensive car very easily.
You can save money by purchasing a vehicle on which you can do most basic maintenance yourself. Oil changes add up particularly fast if you take your car to a service center. Those on a budget will find tremendous savings in handling this task themselves as the cost of materials for an oil change is incredibly low. A quick Google search will return a ton of results, but we particularly like Edmunds’ easy guide.
How Much is Car Insurance?
Many of us don’t consider car insurance costs until we’ve decided on the car we want. Or worse, we don’t bother with car insurance until we’ve purchased the car. This can be a crucial financial mistake, especially for those keeping to a budget.
Car insurance payments are one of the more important things to consider when you buy a car. You may be lucky enough to buy a car for cash or figure your monthly payment is a mere $200. If you don’t factor in car insurance, that could put you seriously over budget!
The type of car, make, model, and year all affect the price of your car insurance as well as the safety equipment and any modifications like fancy alloys or a slick paint job. You could see your car insurance payments double if you aren’t careful. Transitioning from a 2013 4-cylinder sedan to a 2018 V-6 coupe could do just that.
Also, if you are taking out a car loan, you may be required to carry gap insurance as a condition of your loan. Another cost to add to your list…
Buying a car sure is expensive. Even if you keep the initial car cost down, once you’ve added tax, insurance and any other additional costs it can easily get way above your original estimate. Luckily, Compare.com can help with your car insurance. Enter your information just once and get quotes back from dozens of top insurers that you can buy online or by phone today. Start now and see how much you can save.