12 tips to help you save on your next car

AutosFeaturedMoney

Written by:

If you’re getting anxious, worrying about how to save money on a car, go no further. We’ve got this.

Related: Can I pay off a personal loan early?

Image Credit: SerhiiBobyk/istockphoto.

1. Get a Used Car

______________________

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.

______________________

 

 

 

A used vehicle can be much cheaper than a new one. Yes, you may have figured that one out. But here’s the math. Consider that the average price of a used car was $27,500 in December 2021, or about $20,000 cheaper than buying new. The price of used cars has skyrocketed in recent months due to supply chain issues. Prices at the end of 2021 were a third higher than they were in January.

Still, buying a car that’s a few years old may allow you to afford features you wouldn’t otherwise be able to.

Image Credit: DepositPhotos.com.

2. Trade in a Used Car

If you have a car that you’re looking to replace, consider trading it in with your dealership for credit toward a new vehicle. Some dealers will even allow you to use your trade-in to cover the down payment.

Be aware that you may get more money selling your car on your own. Though that process involves finding buyers and will take more time and effort.

Image Credit: DepositPhotos.com.

3. Compare Financing Programs

The sticker price of the car isn’t the only cost you’ll face when you buy a vehicle. Research financing programs through your bank and other lenders.

That way you’ll understand who will offer you the best terms and interest rates to save you the most over the life of the loan. In general, the lower your interest rate and the shorter the term, the less you’ll end up paying.

Image Credit: DepositPhotos.com.

4. Pay for Your Car with Cash

Consider paying for a car in cash, if you have enough on hand of course. You won’t have a monthly auto payment or owe any interest, which means you ultimately spend less money. Paying in cash may also open the door to discounts or give you some leverage as you negotiate a price with the car dealer.

Be sure to weigh this option carefully. If you are able to finance the car at a low interest rate for a short term, depending on your circumstances, it may be worth paying the extra interest costs to keep more money in your bank account for longer.

Image Credit: gpointstudio / istockphoto.

How to Save Money on a New Car

Sure, it’s cheaper to buy a used car. But how to save money on buying a new car?

Image Credit: martin-dm.

5. Negotiate with the Dealer

Before you buy a car, arm yourself with key information. First, know your budget and be willing to stick to it. Next, research pricing and financing in your area. Go to your bank before going to the dealership to find out what loans may be available to you.

Check out websites like the Kelly Blue Book or Autotrader for suggested retail prices and for the cost to the dealer, also known as the invoice cost. The range in which you’ll be able to negotiate will likely fall somewhere between invoice cost and the price the dealer is listing. With this information handy, you’ll be in a better position to negotiate prices with a dealership and know when you need to walk away.

Once you’ve negotiated a deal that works for you, be sure to read all the fine print before you sign a contract. Make sure the dealer hasn’t thrown in any unnecessary add-ons that you’re not interested in, such as extended warranties.

Image Credit: SergeyTikhomirov/ istockphoto.

6. Get an Energy Efficient Car

Electric vehicles are a little bit pricier than their gas counterparts. On average, you can expect to pay $524 per month for a gas vehicle, compared to $529 per month for hybrid vehicles and $689 for electric cars.

That said, over the life of a vehicle, the owner of an energy-efficient vehicle can save quite a bit of money, as much as $6,000 and $10,000. Pair that savings with government tax incentives for some vehicles and owners could save as much as $17,500.

Image Credit: DepositPhotos.com.

7. Estimate Maintenance Costs

Maintenance costs vary across make and model of car. So, as you are researching vehicles to buy, be sure to take these into account. For example, the estimated five-year maintenance on a 2019 Ford Explorer is about $8,900, while a 2019 Subaru Forester has estimated five-year maintenance costs of nearly $1,500 less. Research these costs using online resources such as Edmunds or Consumer Reports.

Image Credit: Omar Osman / istockphoto.

8. Do Not Focus on Brands

It’s easy to get stuck on the idea that you want a certain make and model. But avoid being brand conscious. Instead, focus on — and prioritize — the features that are most important to you and look for vehicles that meet those needs. You may find the cheapest option isn’t the brand you initially thought you’d buy.

Image Credit: Pexels.com.

How to Save Money on a Car Loan

Don’t take your foot off the gas when researching ways to save money on the loan.

Image Credit: DepositPhotos.com.

9. Borrow Less Money Than Needed

The more money you can put down when you purchase a vehicle, the better. More of your own money is on the line, so lenders may offer you better terms and lower interest rates.

Image Credit: Prostock-Studio/ istockphoto.

10.Improve Your Credit

Your credit score is one of the first things that a lender will look at when you seek financing for a vehicle. Generally speaking, lenders offer more favorable interest rates and terms to individuals with higher scores. For example, the average new car interest rate for individuals with a super prime credit score (a credit score of 781 to 850) is 2.58%, while a deep subprime credit score (a credit score of 300 to 500) is 12.99%.

If you have less than perfect credit, there are steps you can take to improve your situation, including making all payments to creditors on time, catching up on missed payments, paying down credit cards, and limiting the amount you apply for new credit. This should help you save money on a car loan.

Image Credit: DepositPhotos.com.

11. Refinance Your Auto Loan

If you’ve already locked in a loan and it becomes unmanageable, or you’re looking to save money to put toward other financial goals, consider refinancing. It’s an excellent way to lower your car payments. When you refinance, you pay off your old loan with one from a new lender, hopefully with better terms and lower interest rates. The time to refinance may be right if you improve your credit score or if interest rates drop.

As you consider this option, get to know the advantages and disadvantages of auto loan refinancing. On the plus side: You may be able to reduce your interest rates or monthly payments, you may get more manageable terms, and you may free up cash.

It may be tough to find a lender willing to offer you a loan, you may grapple with prepayment penalties, and your credit score may go down temporarily. Consider, too, the cost to refinance a car, which can include early termination fees, transaction fees, registration, and title transfer fees.

Image Credit: DepositPhotos.com.

12. Lease Your Car

If you’re someone who always likes to have a new car, leasing can be a more affordable option than buying. That said, purchasing a used car may be much cheaper than either option.

Image Credit: Drazen_.

How Do I Finance a Car?

When it comes to securing a car loan, you typically have a couple of options. Direct lending refers to loans that come from a bank, credit union, or other finance company. The lender loans you money, which you agree to pay back with interest. Dealership financing refers to a loan contract you enter into with your auto dealer. You agree to pay them the amount they finance plus interest over a period of time. Dealerships usually sell these contracts to banks and finance companies that then service the account.

Compare financing offers across lenders to find the best deal.

Image Credit: DepositPhotos.com.

The Takeaway

The sticker price on a vehicle does not necessarily represent the amount you’ll end up paying to drive that car home. Through careful research and due diligence, you can not only knock money off the sticker price but also ensure you don’t overpay for maintenance or financing.

Learn More:

This article
originally appeared on 
LanternCredit.com and was
syndicated by
MediaFeed.org.

 

The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)

All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.

*Check your rate: To check the rates and terms you qualify for, Lantern and/or its network lenders conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.

Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Personal Loan:

SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and DisclosuresTerms of Service, and Privacy Policy.

Personal loan offers provided to customers on Lantern do not exceed 35.99% APR. An example of total amount paid on a personal loan of $10,000 for a term of 36 months at a rate of 10% would be equivalent to $11,616.12 over the 36 month life of the loan.

Student Loan Refinance:

SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and DisclosuresTerms of Service, and Privacy Policy.

Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).

Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 05/01/22. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.

Auto Loan Refinance:

Automobile refinancing loan information presented on this Lantern website is from Caribou. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.

Secured Lending Disclosure:

Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.

Life Insurance:

Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC. Click here to view our licenses.

Image Credit: DepositPhotos.com.

More from MediaFeed

Can you buy a car with a personal loan?

Image Credit: .

AlertMe