Top Personal Finance Blogs
Tuesday December 10th 2019

How Much Car Can You Handle?

When you start shopping for a car, it is important to remember that there are more expenses involved in car ownership than just the initial sticker price. Once you pay for the car, you will need to purchase the title, pay the state taxes, and deal with regular maintenance costs. The amount of insurance that you carry on your vehicle may depend on what kind of car you purchased and how you paid for it. Many lien holders will expect you to carry full comprehensive coverage as long as the car is being paid off. Because of the various expenses involved in car ownership aside from just the sticker price, you must consider all expenses before you understand how much you can afford to pay for a car.

Factor in Tax and Registration Costs

The tax and registration costs can vary depending on the age of the car and the state you live in. The older the car is, the less expensive it will be to purchase and the lower the tax rate will be. Usually the tag and title is less expensive on an older car, as well. Make sure you remember to factor in the possible costs of registering your car when you are building your car shopping budget. You can get an estimated tax and title cost for any car by calling your local tag agent or looking the information up on the state department of motor vehicles website.

Monthly Maintenance Budget

Once you own your car, you will need to keep it running in good condition. There are several parts that will wear out eventually due to the normal operation of the car. Create a savings account or space in your budget to cover regular maintenance, like oil changes, tire rotations, and fluid checks. Car tires can be expensive, and the kind of car you buy will make a difference. Remember to look into the tire size and the typical costs for replacing tires on the models that you are interested in.

Planning for Insurance Payments

Your insurance costs are based on several factors. Some of those factors are directly related to the kind of car you purchase. A brand new car should be covered with a comprehensive policy to make sure that the car can be repaired or replaced if it is involved in an accident. Comprehensive coverage can be more expensive, but it is a necessity on a new car because repair work on new vehicles is also very expensive. If you plan to purchase your car through a loan, you may be required to carry full comprehensive coverage. Make sure you can afford to make those insurance payments once you have purchased the car.

You can lower your car insurance costs by purchasing slightly older vehicles. Look into the types of cars that are stolen most often in your area and avoid buying those cars. You can find information about local crime rates online, or you could contact your local police department to find out where the information is compiled. Some research into the safety ratings of the cars you are interested in can also save you money on your car insurance. The safer your car is, the less you will need to pay.

Negotiating the Best Deal on a Used Vehicle

One of the most daunting aspects of buying a new car is usually the idea of having to negotiate for a decent price. Many consumers dread the confrontation and the haggling that goes into buying a car, so they will agree to the first price offered by the salesman. Avoiding the negotiation process might get you in and out of the dealership quickly, but you will pay for it with an inflated price that could have been much lower with a little more preparation on your part.

Do Your Homework First

Research the car you want before you visit the dealership. Create a file folder full of information that you can print from the internet. Collect the prices for the type of car you are shopping for from several dealerships in your area. Go to the manufacturer’s website and choose the features you want on the model you want. The most important piece of information that you can find is the invoice price. The invoice price is different than the retail price, and it is the price that you need to base your initial offer on.

Stay in Control of the Conversation

When you arrive at the dealership, speak with the salesperson in a clear, concise manner. Don’t give them the opportunity to begin making suggestions about the cars on the lot. Explain that you have already researched the models available, and you know exactly what kind of car you want and which features you would like included in that car. The salesperson needs to understand that you are not interested in a different car, and that you are an informed shopper. You will earn some respect this way and possibly avoid some unnecessary time looking at cars you don’t want to look at.

Use the Invoice Price as a Guide

When you sit down to discuss a price with the salesperson, bring out your printed copy of the invoice price for the car. It is entirely possible that your salesperson may not be aware of the invoice price for the car you are buying because many dealerships do not share that information with their sales staff. Before you go to the dealership, decide how much you are willing to pay over the invoice price. Begin your negotiation with a price that is about $100 or even $200 below your preferred price so that the salesperson will have some room to pull you up from your initial offer.

Don’t Be Manipulated

The salesperson may tell you that they need to take the offer to their manager for approval. They may really just want to leave you sitting alone in the office long enough to begin to change your mind about your offer. If you are left alone, get up and walk around. You could even go out onto the lot and browse among the cars. When you are moving around, the salesperson will be anxious to get back to you as soon as possible rather than risk losing you as a customer.

Seven Top Car-Buying Tips

car buyingBuying a car does not have to be a complicated process. Take your time and follow the proper steps so that you can feel confident that you are getting the best deal on the right car for you.

1. Research the Worth of Your Current Car

The car you are trading in is one of your most important financial tools when you buy a car. Look online and in your local newspaper for the prices being offered for similar cars. You might get more out of your old car if you sell it yourself rather than trading it in.

2. Shop Online First

The internet provides a great deal of information about the cars that are on the market today. Do some research into the types of cars you are interested in before you visit the dealer’s lot. Find out what kind of prices are offered by several dealers in your area. Look through the manufacturer’s website to see what kinds of options are available on the cars you like.

3. Choosing Between New or Used

Check into the financial differences between new and used cars. High quality vehicles from the past few years can be good purchases, but you might be able to save more money through rebates and other incentives on a new car.

4. Secure the Cash Before You Visit the Dealer

If you plan to purchase your car through a loan, go ahead and apply for the money before you go shopping. Having the loan amount already approved gives you a safe price range to shop in. It also reduces the anxiety of applying for money for a car that you have fallen in love with on a showroom floor.

5. Consider the Differences Between Leasing and Purchasing

Leasing and purchasing each have benefits and drawbacks. A lease will put you into a car without a large downpayment, and the monthly payments tend to be lower than traditional loan payments. Owning your car gives you a little more freedom to make cosmetic changes, and you can keep the car as long as you like.

6. Negotiate the Final Cost

Every car purchase involves some haggling. Be prepared to negotiate by looking up the dealer’s invoice price on the vehicle you are interested in. Collect bids from several dealerships to use as leverage during your negotiation. If you are planning to lease a car, make an effort to learn some of the leasing jargon that the salesperson will use to try to throw you off. If you are hesitant to enter negotiations on your own, think about buying a car through a car-shopping service that offers no-haggle pricing.

7. Resist the Temptation of Last Minute Add-ons

As you are filling out the final paperwork for your purchase, the finance manager will probably suggest that you add on some last minute items. Resist this last ditch attempt to get you to spend more on the car than you intended to. These may seem like small additions, but they can add up very quickly.