Why Should You Save Money Before Buying a Car?

A 2015 Business Insider report provided frightening insight into the world of American households. Nearly half of American households do not save money. If you are one of them, you are heading on a dangerous path. Who will take care of your auto loan payments and car-related expenses if you are laid off from work? How will you survive if you are no longer capable of doing a job?

It is important to save money for a secure future. If you are spending all your income without saving a penny, it is necessary to change your ways before buying a car.

Why is it Important to save Money before buying a Car?

You will have to save money for the following reasons:

1. Save Money for Down Payment

The down payment is the total upfront amount that you pay to the dealer. The down payment amount reduces the total cost of the car. It also helps you in manifesting a stable financial position to the lender.

You will have to save money for the down payment because dealers expect you to pay at least 10% of the new car’s value as down payment. The amount of down payment increases if you have bad credit score, low-income or bankruptcy in the past.

2. Save Money for Registration and Insurance

When you buy a car, you will have to buy insurance. Also, you will need to get the car registered with the local DMV office. It involves paying money for title fee, license plate and state taxes.

If you are apprehensive about the entire registration process, you can ask your dealer to finish the process on your behalf. Although, remember that the dealer can charge you extra for the service provided by him.

To know the exact amount of money that you will be required to save for registration and insurance, you must contact the local DMV office of your area.

3. Save Money for Maintenance

Car-related expenses are not limited to monthly payments and fuel. Every car requires maintenance on a regular basis and you will be required to keep aside money for the following things:

>> Oil change

>> Fuel filter replacement

>> Tire replacement

>> Brake repairs

>> Battery replacement

>> Locks, latches and hinges lubrication, etc.

The amount of maintenance fund varies from one car to another. Also, it is important to consider the general wear and tear of your car to calculate an accurate amount for maintenance.

4. Save Money for Emergency Fund

It is a fund that is set aside to be used in times of emergency. The purpose of the emergency fund is to provide financial security in times of job loss, serious illness, etc. Creating an emergency fund will help you in staying on top of your auto loan payments. It will enable you to make regular payments and avoid any negative effect on your credit score.

Financial planners recommend keeping aside an amount equivalent to at least three months of your income as emergency fund.

Buying a car is huge financial responsibility and so, it is important that you prepare yourself for it. Keeping aside money for a car will give you peace of mind. If you go for an auto loan without saving money, you will be risking your financial stability as well as your credit score.

How to Get the Most From Your Visit to the Car Dealership

Buying a vehicle is a big decision, and it requires a substantial investment in both time and money. You might think that buying a vehicle is as simple as taking a casual stroll down to your local car dealership with a purchase idea in mind. However, there are several steps you should take to hammer down your wants and needs first. You should also be aware of certain tactics that may be employed by the salesperson.

Decide Preferences Ahead of Time

This is a crucial first step in making your time spent at a car dealership worthwhile. While it might seem obvious to pick out all the luxury features that you want, from GPS navigation systems to powerful speakers, what about the safety features? Did you know that most new vehicles have automatic braking systems that apply in emergency situations when you are speeding towards an object and haven’t slowed down yourself? Is this a feature you want?

Even more than the features you desire, you’ll want to clarify everything you don’t want, especially to the salesman on your first visit. Don’t like the shape of particular models? Can’t stand the fuel inefficiency of SUVs? Make sure that you are clear with your salesman about the features that not only attract you but also those that turn you off.

Test Drive, Inspect, and Research

It also might seem to go without saying that you’d want to test drive a vehicle beforehand. But you might be surprised at how many people forget to test drive a variety of vehicles. You want to make sure that your choice isn’t based on a lack of experience with other vehicles. For example, you might love the steering control in an efficient, sub-compact vehicle, but have you tried taking corners in a sportier model?

Once you think you’ve narrowed down a good choice, you’ll want to do some research and find out how well others have fared with that vehicle. Don’t just read the reviews online; ask trusted friends and family their opinions on the make. Have they heard of the model, or do they know someone who drives it? And if you’re buying used, don’t forget to get your mechanic’s opinion as well. Not only will you want them to inspect the car for wear and damage, but you’ll want to get an honest, professional opinion on whether it’s a good fit for you.

Salesmen are There to Sell

Finally, while salesmen can be very helpful with their ability to find and match vehicles to buyers, they don’t know everything about your personal needs and preferences. The salesman’s job consists of selling vehicles, and it’s your responsibility as a buyer to make sure that the vehicle you choose is ultimately appropriate for your needs and budget.