Money falling off finger

6 tips for buying a car

On average, people buy a new car every few years. However, a poor car purchase could cost you hundreds, if not thousands, of dollars. The tips below will help you prepare for your next car purchase and ensure that you are a smart car buyer.

1. Avoid borrowing to pay for your car

Interest rates on car loans can hike up the total amount you pay for your car significantly. Car loans usually have at least a 7% interest rate, meaning that the actual amount you pay is a lot higher than the original price. An added bonus to paying cash is that many dealers will accept a lower price for the car as they receive the whole amount instantly.

2. Buy a used rather than new car

Racking up a huge car loan to get a flash, new car seems like an even worse idea when you realise how much these cars drop in value so quickly. Although buying a new car probably means you avoid the risk of buying a lemon, a car will depreciate in value the most in the first few years of its life. In fact, an article by Edmunds states that on average, as soon as the car is driven off the lot, its value drops by 11%. For this reason, it is generally believed that the best time to buy a car is when it is 2-3 years old, as it has had its biggest drop in value, but is still new enough to be reliable.

3. Consider ongoing expenses

When buying a car, many people don’t realise how much the car will cost in the long run. You want to consider how fuel-efficient the car is as you don’t want to be paying hundreds of dollars every time you fill up. Another thing to consider is that if you need new car parts, how expensive these parts will be. European cars usually have more expensive parts that can hike up total costs if something needs to be repaired. You want to look out for a reliable car that won’t cost you an arm and a leg to keep on the road.

4. Do your research

If you have a specific car in mind, research what similar cars are selling for. This will give you a point of reference as to whether you're getting a good deal. From here, you may be able to haggle the price of the vehicle down. If you are going to look at a used car, it is a good idea to take a mechanic with you to ensure that everything is running smoothly and there aren’t any immediate repairs that will need to be completed. There are several companies that will do pre-purchase vehicle inspections to give you peace of mind.

5. Make use of people you know

If you know someone that knows about cars (such as the mechanic mentioned above!), taking them along with you to check out one that you are thinking of purchasing is a good idea so they can help determine if you are getting a fair deal. Your friends and family can also share experiences they had when purchasing a car, which can help ensure that you don’t end up with a lemon – remember to consult those around you when looking at purchasing a car.

6. If it’s too good to be true, then it probably is

Finding a car you want that is $3,000 cheaper than similar cars is a sign that you should be very hesitant – there is a reason that the price would be that low. There could be something faulty with the car, or it could be stolen. There could be valid reasons for the price reduction, but just remember, it may mean that you will have to fork out extra funds to get something repaired.

The bottom line

Overall, there are many things to look out for when you purchase a car, not only immediate costs or ongoing costs, but any repair costs added on top of that. Being aware of these things can save you a lot of money, stress, and hassle. Make sure that next time you buy a car, you think about the small things that can add up to make your purchase easier and cheaper.