Five tips to help you save money when buying a new car
Here are five ways to help put more money in your pocket, whether you’re buying your first car or in the market for an upgrade
When you’re in the market for a new car, you have many options to choose from and each car has its pros and cons. Car salespeople will often try to make a more expensive model seem like a bargain and convince you to buy a car with lots of extra features, even if you don’t need them.
In the excitement of buying a new car, it’s easy to be wowed by the aesthetic appeal and in-car technology of the latest models, without giving a thought to whether you can really afford it.
The price tag of the car is just one chunk of the overall cost of owning a car. You should keep in mind that additional costs such as car insurance and maintenance can also weigh on your finances, as a car that costs a lot of money might be expensive to service and may attract a higher insurance premium.
If you're wondering how you can grab a car that’s a good fit without spending more than you budgeted for, here are some tips to keep more money in your pocket when you drive your new set of wheels out of the showroom floor.
Consider the time of the month and year
The end of the month is the best time for car buyers to score great deals, as that is when dealerships are anxious to meet their monthly sales targets. Some car manufacturers offer bonuses to dealerships that sell the highest volume of cars, so a dealership might be willing to sell a car at a lower price during the final week of the month if it can recoup the loss with the incentive. The end of the year is also the best possible time to buy a new car, as dealers are under pressure to meet year-end targets and get rid of older stock.
Compare car financing quotes from different lenders
Different lenders will offer you different interest rates on loans, so it’s best to compare quotes from at least three banks or dealerships. When calculating your monthly repayments, the lender will usually factor in various additional charges such as an initiation fee‚ an extended warranty‚ the cost of delivery, and the licence or registration fees.
Before entering into a finance agreement, ask for an estimate, which should show the interest rate and other fees, and consider settling for the one that offers the most competitive rates and conditions. Beware of ‘rent-to-own’ financing deals, as you could be paying more in interest over the duration of the agreement.
Reconsider the service or maintenance plan
It’s a good thing to have additional protection in the form of a maintenance plan, which pays for the servicing of your car, and an extended warranty, which covers the cost of replacing mechanical or electrical car parts. However, when it is offered by the dealership, you should carefully consider if the benefits will be worth the money you’ll be paying.
Ask the dealer how much it will cost to service the car. Some maintenance plans can be steep, only covering you for two years or a certain mileage. You might be better off paying for the services yourself or investing the money in an emergency fund.
Don’t just blindly accept the dealership or financier’s insurance offer
While your vehicle financier can demand that you take out insurance before they will offer you credit, it cannot force you to join a certain insurance company. When buying a car, the dealership might offer insurance as an add-on, but you have a right to shop around for the best rates. By comparing insurance quotes from different providers, you may not have to pay for coverage you don’t need, and you could save hundreds of rand a year.
Don’t trade in your own car
Many dealerships will happily take in your old car as part of the transaction, but you may not get as much money as you can out of the trade-in and will still need to pay a significant chunk of cash for your new car. You might want to consider not trading your car in at all, and just putting it on the open market. You could have a better chance of selling it for a higher price than what a dealer will give you in trade-in value.
A car is one of the biggest expenses you’ll ever have, and if you’re not careful, the purchase could end up costing you more money than you can afford. You can cut down a lot of expenses if you know the tricks of the trade and what to expect.
Implementing these five tips can help you keep your budget in check and position you going forward to be a more informed car shopper.
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