Buying a new car is a big decision to make, but it is also one of the most exciting. There are more cars to choose from – including the new generation of electric cars entering the market – and plenty of ways to customize the car further. You also have more financing options to help you buy the car of your dream.
Nevertheless, you still want the total cost of owning the car to be as affordable as it can be. There are several things you can do to save on your next car, and we are going to look into the best tips and tricks you can use in this article.
Set a Budget
It is very easy to get carried away when there are so many options on the market. An extra £10 in monthly repayment is not that much, is it? Only £50 more per month is something you can handle, right? That’s the lure of the market right now.
Yes, it is tempting to go for a more expensive car when you look at the slight bump in monthly instalment. You may find a luxury model (seemingly) affordable; you might even go for it. However, you will still end up paying more for the car.
Let’s not forget that higher-end cars are often more expensive to run and maintain. A BMW is certainly more expensive to service than a Honda. The £50 extra on monthly instalment will eventually turn to hundreds in extra running and maintenance costs.
So, what is the best way to avoid this issue? Set a budget from the start. Figure out how much you can actually spend on the car and stick to that budget. Having a clear budget in mind will also help you narrow down your search for options you can actually afford.
Compare Your Financing Options
Never go for the first car loan you come across, especially the one that the dealer offers. The loan is the most convenient one to take out, but it is not always the most affordable on the market. Now that you have loan comparison tools available online, there is no reason why you shouldn’t get quotes from multiple lenders before taking out a car loan.
While you are at it, make sure you also compare deals and special offers. Both the car market and the loan industry are very competitive right now, so you will find plenty of deals to look into. Some car loans come with 0% interest for the first several months. Others offer you £1 down payment and other discounts to make the loan more affordable.
Consider Your Down Payment
Speaking of £1 down payment offers from top lenders, setting the right down payment amount is also a great way to save on your next car. The principal amount of your auto loan depends highly on the amount of your down payment, which means you can lower that principal amount from the start.
With a lower loan principal amount, you actually pay a lot less in interest. It is possible to save hundreds on interest alone just by increasing the down payment of your car loan.
The only time when zero or small down payment makes sense is when the car – or the money allocated for down payment – is used for productive purposes, such as for going to work or for running your business. The return you get from having a car outweigh the money you save on interest in these cases.
We really can’t talk about how to save on your next car without talking about the used car market. You’ll be surprised by how many new cars are available in the used car market just weeks after they were released.
It is not uncommon for people to sell their new cars after a few weeks. They may not be able to keep up with their instalments or their financial situation isn’t what they expected it to be, and selling the car is their only option.
These barely-used cars are much more affordable than the new ones, even when they are of the same make, model, and year. You can save up to 30% on the car by buying used. You can save more than that by going for slightly older models.
One last thing you need to keep in mind before signing that loan agreement and buying the car: consider the long-term costs. Aside from running and maintenance costs we discussed earlier, you also want to consider the car’s insurance premium and depreciation.
These are the tips you can use to find the best car to buy and save a lot of money on the purchase. Now that you have more models to choose from, great deals to benefit from, financing options to help you make the purchase, and these tips we just discussed in this article, buying a new car can be exciting and affordable at the same time.