One of the worst feelings you can have is when your car finally calls it quits. Your ride has been good to you all of these years, but like all good things, it must end. Now, you are stranded with no way to get to work, school, or your kid’s activities. You know that you have to get a new vehicle, but you are probably petrified at the cost; you may already be short on funds as it is.
However, it’s not all bad. Even though buying a replacement car can be quite a significant investment, there are many ways that you can try to keep the cost low, whether it be by selling your old vehicle or avoiding unnecessary costs for a new one. Here are a few considerations to make as you attempt to replace that old car.
Decisions Must Be Made
Before running out to car dealerships, take some time to think about whether you really need to invest in a car purchase or if your existing vehicle still has life left. How often do you need to perform maintenance on your car? If it only dies once or twice a year, then it may be more cost-efficient to bring it to a mechanic and fix the underlying issue. However, if it is a roll of the dice if your car will start when you leave for work each morning, then you may put more thought into a new purchase.
Here are some other questions you should ask yourself:
- How many miles do I have on the car?
- If I get the car maintained, how long will it be before I have to bring it in again?
- How much is the maintenance costing me each time?
- If the maintenance costs are too much, would that money be better spent on a down payment for a new vehicle?
- Do you need to invest in an extended warranty to cover maintenance costs? Would the additional expense be worth it?
No one knows your car like you do, so if you believe your ride is still safe and will get you from point A to point B with little fanfare, then you might decide to keep it a bit longer. Otherwise, if the car has become too costly or unreliable, then it may officially be time to purchase a replacement. Naturally, the first question to ponder is whether to buy new or used. There are benefits to both options. However, always keep your budget in mind.
The benefits of new cars include:
- They come with at least a three-year warranty
- They usually have the latest technology, including GPS and blind-spot monitoring
- You may get a better interest rate
There are many other benefits to buying a used vehicle. These include:
- They can be generally less expensive
- Insurance costs for used cars are lower
- Used car shopping can be easier, with many dealers and online shopping websites specializing in used car sales
Of course, both options also have their downsides. It can take auto manufacturers many years to work the bugs out of new technologies. With old cars, you never really know its history and prior issues, and new cars can cost a lot more than the sticker price suggests, especially if you finance the vehicle. Take a close look at your income and complete careful research to make the most educated decision for your situation.
Sell Your Old Car
Whether you decide to buy new or used, you can cut some of the costs associated with the new purchase by selling your old car. You may look at your vehicle and think it has seen its last days, but even the most decrepit automobiles can get you a few bucks. Even if you can’t get rid of the whole car, you may be able to sell the parts.
To start the process, get a used car inspection at a local auto mechanic or go to a major dealer like CarMax. These locations can tell you what issues the car has and how much it will cost to fix them. You can then make a choice to do the repairs or tell potential buyers what will be necessary to get it in tip-top shape. Some buyers like the idea of a fixer-upper, but you still want to be honest with these issues upfront. If you cannot find any buyers by advertising online or asking friends and family, then you may be able to sell it to a company that will use it for parts or recycle it.
Speaking of parts, you may be able to sell those, too. As older cars and their parts become obsolete, when other car owners need those parts, they are very difficult to find. For that reason, you can sell many older car parts online or at a local mechanic. Some of the easiest parts to sell include the engine, transmission, and the seats. This way, you will have more money in your pocket when you walk into the dealership.
Be Smart at the Dealership
Now that you have settled on buying either a new or used car, it is time to head to the dealership, but do not rush the process. You want to make sure you get the best deal before you sign on the dotted line. As you peruse the lot, look at the details of the vehicles you have your eye on and check the gas mileage while avoiding larger vehicles that will need more gas. If you are looking at used cars, narrow your search to those with the lowest overall mileage so that you are saving money and getting a car with plenty of life left.
As mentioned before, many people choose to avoid new cars for two reasons. One is that they depreciate very quickly once they leave the lot (up to 20% after a year). Further, the cost of financing can be prohibiting. For instance, although a car may cost $25,000, you then have to add on taxes and an interest rate. Suddenly, you are paying thousands of dollars more than you probably expected.
Subtract the automatic depreciation once you leave the dealership, and you are spending more money than you want and need to. If you must get a new car, try to put at least 20% down and get the shortest loan period possible. While the payments might be more, your interest rate will be less.
Once you get the attention of the car salesman, the game has begun. They will do anything they can to get you to pay the maximum amount for that new car, so go over every detail carefully. There are many fees that they will try to tack on including a processing fee, which you can negotiate, and the cost for added “paint protection,” which you don’t need.
When you go through the lease agreement, question everything you find suspicious and keep the overall price manageable. You may also be approached with an extended warranty that covers you past the standard 36,000-mile warranty, but this could cost you at least another thousand dollars, and it is usually from a third-party that may not be around when you need them down the line.
In the end, replacing that old car will be a big expense, but if you follow these steps, you can make the cost more manageable. Take your time and choose the best car for your needs, so you don’t have to go through this process again for a long way down the road.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.