With spring now in full force, one thing is on the minds of many Americans — buying a car. As summer and fall are typically the best times to buy a car, many use spring as a trigger to start thinking about what they’re looking for in their next automobile.
Cars are one of the biggest purchases we make. Unless you’re able to pay cash for your new or used car, it means adding a monthly car payment to your budget. The average car payment for most Americans is $470, though there are ways to cut that expense down significantly if you do some work prior to and during the purchase. If you’re looking for some ways to save on your car loan, these simple tips can help.
Make a down payment.
Most new cars lose at least 20 to 25 percent of their value the moment you drive off the lot, and the last thing you want to be is upside down in your loan. Simply put, having some form of down payment will not only help keep that from happening, but it will also help reduce the amount you’ll pay each month.
If you don’t have the money for a down payment and can afford to wait on a car, then take time to save for one. The additional benefit to having a down payment is that it’s also likely to result in you receiving a better deal on your loan. If you don’t have the cash then don’t overlook using your old car as trade-in value toward the new car. Just remember to negotiate those terms, too.
Shop around for your loan.
This is another simple but effective way to lower your car payment. The interest rate climate is relatively low at the moment but there is still room to get lower rates, which will result in less money out of your pocket each month. Prior to going into the dealership, spend time shopping around for loan rates. It’s possible the dealer might still be able to offer you the lowest rate, but often times you can find a better rate through a local credit union or online bank and many times they’ll throw in perks like gap insurance.
Remember that the sales pitch doesn’t end on the lot.
There is a reason why many people don’t enjoy the car buying experience — every area of the dealership is involved in the process of selling to you. The negotiation of the purchase price is only one part of the process.
Not only is the salesperson working to make money trying to upsell you but other areas are as well. Arm yourself with that knowledge by doing your research ahead of time and having a general handle of comparable prices and perks.
Read the contract thoroughly.
Now that you’ve agreed to buy the car, you get the pleasure of reading the sales contract. Don’t just gloss over it as you want to catch everything they’re going to charge you for — including surprises they didn’t mention in the sales process.
Not only can you find things like docking fees, but also other fees that can add up to several hundred to several thousand dollars. Instead of simply accepting those expenses as something you must pay, don’t be afraid to negotiate or question them.
Consider used and new vehicles.
The common belief is that you must avoid buying a new car to get the best deal. That is generally true, but also know that used cars have become sought after and thus create a better return for most dealers. Look at all your options and don’t be afraid to look at new ones as dealers might be able to work with you more on getting a better price. Just remember that when working with a salesperson to never tell them a monthly amount you want to pay. You’ll likely end up paying more on in the long run if you share that kind of information.
Also consider going the private seller route. You will likely have less in terms of warranties this way, but it could get you a much better deal.
Taking on a new car payment is rarely a fun experience, but with some work you can save money on your purchase.
More from U.S. News
50 Ways to Improve Your Finances in 2015
12 Ways to Save More in the Springtime
10 Ways to Stay in Shape on a Budget
5 Ways to Save on Your Next Car Loan originally appeared on usnews.com
