We bought a new SUV recently and were asked to share helpful car buying tips to save you money, time and regret.

If you need a car, there’s a lot to consider: whether you’ll need a loan to buy it, whether you can afford all of the car-related expenses, and how to go about finding and buying the right car to meet your needs.

Make a Budget

Before you ever set foot onto a car lot or go browsing online ads, you need to know how much you can afford. I am not just talking about just a monthly payment either. You need to calculate costs for a down payment, registration, insurance, maintenance, and gas. Whatever you do, do not let the bank nor dealership tell YOU what you can afford. Go in there prepared!

Example #1:
Let’s say you want to pay cash and have $5000 total to buy a car. You need to understand that you can’t actually afford a $5000 car. With taxes and purchase fees, you’re looking more at a $4000 car (or less) just to be safe. Knowing this will save you a lot of time and frustration when you actually begin your search.

Example #2:
If you plan on taking out a loan, you need to first look at your current budget and savings account to see what you can afford. If you only have $500 after paying your current bills and expenses, that does not mean that you have $500 to spend on just a car payment.

Think carefully about how this car payment will impact your future goals. Afterward, see what you are comfortable with paying every month. Your car purchase should not keep you from eating or saving for the future!

Payment Options

Cash

Paying cash can save you thousands of dollars in interest payments. Plus, you don’t have to worry about having a car payment for 3+ years. You can either use existing savings (not your emergency fund) or you can save up before your current car gives up on life (like ours did 😩).

Most people are aware of their car’s age, mileage, and health. If you think you have a few years before needing a new car, set a goal and then divide it by the number of months you want to put away savings for. Of course, you can’t time it, but I wouldn’t suggest waiting until your car is 100% dead either.

Example:
$10,000 goal / 36 months = $277 a month

Put your cash in a high yield savings account and you’ll get paid 2%-2.5% interest while you build your savings. I would not suggest putting your savings into the stock market for your car savings. Doing so puts you at a higher risk of losing money if the market falls before you buy your car.

Auto Loan

If you are going the financing route, you need to make sure that you find (and get) the best loan possible. Again, do not look at just the monthly payment; you need to assess the interest rate, term length, and fees associated with the loan. Make sure to check with your bank, local credit unions, and other institutions.

Do not settle with the first bank you talk to and don’t allow everyone to check your credit. Use sites like Credit Sesame or Credit Karma to get an idea of what your credit score is. Use that number while you shop around instead of taking multiple credit hits.

Your credit score will contribute to how good your options are but don’t settle for a crappy loan. High-interest rates, long terms, and low down payments can lead to you immediately being “upside down” on your car (owing more than it is worth). So, try to avoid that.

Research

Now that you are aware of your budget and your financing options, you need to research the automobile that you are interested in. Try to be flexible with brands, models and type at the beginning to avoid limiting your options or missing out on a really great car.

Things to consider:

• Safety records
• Gas mileage
• Dependability (aka will the car crap out on you in a few years)
• Functionality (options)
• Maintenance requirements, issues and costs
• Insurance costs

Finding this information is pretty easy, start by checking out the following for your researching needs:

• Edmunds
• Kelly Blue Book
• IIHS.org
• Family
• Personal mechanic
• Car forums

Where to shop

Now for the fun part – actually shopping for your dream car. The first rule of thumb is that you should have multiple options in mind. Having more options increases your chances of finding a better deal. It’ll also keep you from just settling on the first car you come across. The salespeople will try to pressure you to buy the first time you step foot on the lot, so don’t give in.

Online Search

You can find pretty much anything online these days, so the internet is a great place to start your car search. Kelly Blue book gives you an idea of what is a great value for the cars you’re interested in. Keep this in mind while you’re searching within YOUR BUDGET 😉.

Below are a few sites you can use to see what is available in your area. Most of these sites have filter options but at the beginning, make sure to be flexible with the year, make and model. If you want a specific style (SUV, truck, van, sedan, etc) make sure to include that in your search.

• AutoTrader.com
• Cars.com
• CarGurus.com
• Craigslist

Dealerships

Once you have found a few cars in your budget, it’s time to go to the dealerships and see them up close and personal. There are a few different types of dealerships and they offer very different experiences regarding negotiating, guarantees and service.

No-haggle dealerships

These dealerships operate on fixed price policies. There is no room for negotiating which can be appealing to some but just keep in mind that you may pay a higher price for the car. The benefits include: easier and faster transaction time and upfront pricing.

• Enterprise Car Sales
• Hertz Car Sales
• Carmax

Online Dealerships

So, I don’t have personal experience with buying a car online, but a few sites were recommended to me so I’m sharing them with you. If you’re okay with buying a car before touching it, then this is for you. The perks include better prices, no sales pressure, easier transactions and money back guarantee options.

• Carvana
• Shift

Local Dealerships

These dealerships are just your typical run-of-the-mill dealerships. They’re usually branded by the type of cars they sell. This can be helpful if you already know the car you’re looking for because you’ll likely find it on the lot somewhere.

I bought mine from an Acura dealership and was able to buy a certified car that was still under warranty and had a free manufacturer extended warranty. I also got a ton of free perks like Sirius XM and roadside assistance.

Be careful while you’re out shopping around though. There are some local places you’ll want to steer clear of. Lots that only sell heavily-used cars or advertise themselves as places with great deals for people with bad credit should be avoided at all costs!

Your interest rates will be so high that by the time you’re done, you would’ve paid for 2-3 cars. Or your car will be broke down a week after leaving the lot like one of our family member’s car earlier this year.

Time to buy

Once you finish your test drives and narrow your options down, it’s time to buy! This is the most stressful part of the whole process in most cases (depending on where you’re buying from) due to the negotiation process.

Negotiating

If you’re buying a car from a no-haggle dealership, you get to skip this task. Otherwise, just be prepared for some back and forth conversation. You want a deal, they want a profit. Do your research first so that you know your price point and work from there.

Stay calm and be firm with your offer. Start with an offer that’s about 20% lower than what you actually want to pay because the dealer will counter with a higher price. Starting low leaves room for the counteroffer to still come in under your target price.

Closing the deal

When you finally settle on a price, this is where you’ll close the deal and share how much you’re willing to put as a down-payment and how you’ll be paying for the car.

After that is done, prepare yourself for a mountain of paperwork.

READ EVERY SINGLE THING YOU SIGN.

You’ll want to make sure:

• Everything you agreed on is reflected in writing
• No “extras” have been added without your knowledge
• Everything is spelled correctly
• There aren’t any blank spaces that can be filled in later
• You get a copy of the contract after signing.

That’s it! Once the ink is dry, you’ll have your keys in hand and you’ll be ready to ride off into the sunset! Make sure you add your new car to your insurance ASAP so you don’t get in trouble later.

Hopefully, you’ll be walking out feeling proud of yourself and your selection! Let us know what other car buying tips you have in the comments below.

P.S. If you’ve never created a budget, start here.

P.S.S. Also download our free spreadsheet to immediately see how well you’re doing financially. If you want to be even fancier, check out these spreadsheets.

– $tay Wealthy Fam!