Tips for Buying a Car and Sticking to a Budget

Tips For Buying A Car
Knowing exactly what you want and how much you can afford before you shop will save you a lot of heartache. Photo: Erik McLean on Unsplash

Dreaming of buying a car can be really exciting, but actually signing the papers is often stressful.

Unless you’re prepared. These tips for buying a car will help you to get through the process confidently and to drive home without any regrets!

We bought a truck last month. It was brand new, but last year’s model. It was our first time buying new, but not our first experience at a dealership and certainly not our first car purchase. The tips below are rules we have followed for every car purchase we’ve made and they have really helped us to drive away happy customers.

Related: Buying a New Car? 9 Things You Need To Know–Right there on the Window Sticker

Know What You Can Put Down

Before you start car shopping, you need to know if you’ll be making a down payment. While some special offers and deals will say you can get a car for zero down, these deals aren’t always smart. And going in with a down payment can significantly lower your monthly payments. So, what can you afford to put down?

Calculate the Total You Can Afford

Use an online calculator to figure out how much car you can afford. Most calculators have a Budget tab or Maximum Loan tab which will allow you to work backward, putting in the monthly payment you can afford, your downpayment amount, and the interest rate you expect to pay. The calculator will then give you a ballpark figure for the total cost of the car you can afford. This will help you a lot when you are shopping and will save you a lot of time because you won’t have to calculate for each and every car you like. This is one of my top tips for buying a car.

Shop, Shop, Shop, and Shop Some More

Start window shopping, looking online, or using a car brand’s builder to build the car you want long before you buy. This will give you a good idea of the current going rate for the vehicle you are shopping for, where you might find the best deals, and whether you want to build and order or look for a deal on a lot. I shopped for about two years before buying my truck. I took note of what the truck was selling for in different regions, which dealerships offered good incentives and when, about what time of year the dealers really wanted to get last year’s models off the lots, and how much my dream truck would be if I ordered it brand new with all the add-ons I desired. Then, when I found a deal at a dealership, I knew it was a good one because I had been watching the market for so long and knew how much the truck was worth. I was able to make an educated decision.

Related: Ever Wonder How Car Dealers Make Money?

Educate Yourself Before You Go

Know what kinds of add-ons a dealership is going to try to sell you. For us, it was bed liner and window tint. We got those. And then at signing time, after we had agreed upon a sale price and monthly payments they tried to add GAP insurance, extended warranty, and a special care package that covered nicks, dings, tires, etc. We were not prepared for these extra expenses which would ultimately raise our monthly payments, but we stuck to our guns and only opted for the GAP insurance which was an extra $9/month. The dealership then threw in the special care package for free to help us stay in our budget.

Be Firm at the Dealership and Get What You Want

When you start showing interest in a car the salesperson is going to enter sales mode and offer you all the things. Remind him or her regularly that you have a budget and that you know what you can afford to pay each month. Give them a number that you cannot go over and be prepared to stick to your guns. Most of the time they do have some leeway and they can either come down on the price, find incentives to help you or go back to the lender for a better interest rate.

Related: How To Survive a Car Dealership: The Personal Car Shopper

Tips For Buying A Car And Sticking To A Budget

A web developer, digital marketing consultant, auto journalist, truck expert, photographer and lover of gadgets, Erica is a textbook... More about Erica Mueller