A car is not an investment; it simply helps you get from point A to point B. If you are in the market for a new vehicle, consider the following tips to save money in the process.
1. Pay cash for your new car. Make every attempt to minimize the amount you borrow to purchase a car. Whether it is new or used, a car instantly loses value. This is different from a home purchase for example, where the cost of borrowing is often eliminated by the increase in equity over time.
2. If you don’t have enough cash saved to buy the car, look for a loan that has the lowest interest rate. Really spend some time to shop around for a car loan. Many places offer them, even some car insurance companies. Go with the loan that offers the lowest interest rate. Then pay the largest down payment you can.
3. Remember to calculate the cost of car insurance. Before you buy your next car, give your insurance agent a call. Surprising to some, car insurance rates vary greatly by what type of car you buy. Also, discuss the cost of collision coverage which is required with any car loan.
4. Don’t buy the same day you look. The art of negotiating for a car is to shop around, know your price and make them sweat. It is easier said than done, but for the best deal, the best advice is to walk away from the negotiations and return the next day for their final offer request.
5. Once you have bought your car, keep it for ten years. Ten is the magic number for two main reasons. First, you get to utilize the full value of the vehicle for the initial investment cost. Second, the car still has enough value to make it a reasonable used car sale or trade-in.
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