Shopping for New Car? 6 Money‑Saving Moves To Make First
Buying a new car is exciting, but it can also be one of the biggest financial decisions you'll make. Smart buyers know that saving money isn't just about negotiating the sticker price; it's about planning ahead, timing your purchase and avoiding costly mistakes dealerships hope you'll make.
From setting a realistic budget to skipping unnecessary add-ons, these strategies help you keep more cash in your pocket while still driving away in the car you want. Here are six ways savvy shoppers save money on new cars.
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1. Know Your Budget
Smart car buyers start with a set budget that includes not only the car's price, but additional costs like insurance, fuel and maintenance.
A low monthly payment is pointless if high insurance rates, expensive maintenance or poor gas mileage make the car too pricey overall. Seek makes and models with lower insurance rates and relatively better fuel economy before narrowing down your car options. Also, some finance experts recommend budgeting $50 to $100 monthly -- or $600 to $1,200 annually -- for car maintenance and repairs.
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2. Do Your Research
Savvy buyers don't rely solely on a salesperson for information about models, features or pricing. Before visiting a dealership, identify the makes and models that suit your budget and have your desired features and prices.
By researching prices, features, safety ratings and owner reviews beforehand, you can be better prepared to identify fair deals. Don't hesitate to walk away if the price isn't right.
3. Shop for an Auto Loan Before Visiting Dealership
It's always a good idea to arrange financing before negotiating with dealerships. By securing a loan through a bank or credit union in advance, you can know your loan terms and monthly payments upfront -- this helps you avoid any surprises.
With a preapproved loan, you gain negotiating power, and you're not stuck with the dealership's poorer financing offer.
4. Avoid Getting Stuck in an Upside-Down Auto Loan
Smart buyers don't borrow more than the car's value.
An "upside-down" loan can be risky, especially if the car needs to be sold or traded. To avoid this, put down a significant amount and opt for shorter loan terms, ideally three to four years. This way, you can pay down the principal faster and save on interest. If possible, also steer clear of high-interest loans.
5. Understand GAP Insurance
Smart car buyers know when Guaranteed Asset Protection (GAP) insurance is necessary and take steps to avoid it. GAP insurance will cover all or a portion of your auto loan balance if your car is stolen or totaled and you owe more than the car's worth. But getting a GAP insurance plan isn't a hard requirement, especially if you've made a large down payment or have a low-interest loan. If you need one, getting it through an auto insurer can often be much cheaper than going through a dealership.
6. Skip Dealer Add-Ons and Fees
Dealerships often attempt to add unnecessary extra services like rust-proofing or fabric protection, significantly increasing the final price. So, review itemized charges for your car carefully and decline any add-ons you don't need. You can always get them later for less if desired.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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