In many parts of the country Americans need a car to drive to work, get to school and attend personal engagements and appointments. Unfortunately, most Americans do not budget for an upcoming car purchase, and subsequently end up taking out large personal loans at exorbitant interest rates. Pretty soon the “low monthly payments” that the dealer promised are strangling your family and you can’t figure out how to get yourself out of debt. Fortunately, buying a car doesn’t have to be a debt accruing process . Here are the 4 ways I saved money and bought a car without accumulating any personal debt.
Do Your Homework & Buy Used: The moment you drive a new car off the lot, it’s used. You save yourself a lot of debt and a huge depreciation in value when you buy used. Consult Consumer Reports and Kelly Blue Book to find out what makes and models are the best value for your money. If you’re purchasing from a private seller have a mechanic you trust take a look at the car before you purchase it. He/she will be able to tell you if the car has any major mechanical problems that may cost you a lot of money in the near future. I purchased my Honda Civic from a dealer and was thrilled with the car I got for my money.
Save First, Buy Later: Don’t wait until your current car is dead to start thinking about getting a “new to you” model. Your current car will eventually stop working and you’ll probably end up buying something you can’t afford if you don’t save for a new car in advance. I started saving for my new car long before my old car died. I drove my 1993 teal Chevy Cavalier until it overheated and left me stranded on the side of the highway. Thankfully when she died, I didn’t have to panic or run out to finance a new car. I had been saving for a year in advance, and already had several thousand dollars set aside to buy a replacement. Talk about peace of mind.
Make a Budget and Stick to it: If you only have $5,000 to buy a car, don’t browse new car lots or look at online advertisements showing cars retailing for $10,000. You wouldn’t look at a $1,000,000 dollar home when you have a $250,000 budget, would you? I searched craigslist and my local classifieds and only made appointments to see cars that I knew were within my budget. When I went to the dealer, I knew exactly what I wanted and what I was willing to spend. I negotiated firmly with the salesman and let him know I’d be willing to pay in cash, same day, to get the price I wanted.
Be Flexible About Appearance & “Extras”: A car that’s within your budget may or may not have all the “bells and whistles” that newer models have. Be flexible about exterior colors, interior fabric, and special features. Often, salesmen and women are more willing to make a deal with you if you’re willing to take a less desirable car off their hands. This doesn’t mean you shouldn’t be choosy, but rather you should scour the lot to see if there is a hot pink Accord with 40,000 miles that the dealer is dying to get off the lot. My Civic didn’t have automatic door locks or windows, but the car was safe, the gas mileage was great, and the price was right.
Cars can be a huge monthly expense and a tremendous emotional and financial burden if you don’t do your homework. Fortunately, by saving my money, paying cash, and being flexible about features, I was able to buy a great car on a limited budget, without going into debt .