Did you know that housing and car expenses add up to about 50% of the average person’s spending? Over time, smart choices in those areas could be the difference between living paycheck to paycheck and have a million dollars in the bank. Today, I’d like to cover a few ways to save money on the car expense side of the equation.
- Buy at the Right Time – At luck would have it, the best time to buy a car is at the end of this month. December is when many dealer want to move the old models to book money to close out the year. In addition, there’s not a lot of competition people are focused on the holidays. It’s not like they are going to give cars away, but you might be able to shave a thousand or two on the final price.
- New or Used? – Deciding between whether to buy a new and used car can make a difference in costs. I used to recommend that people buy used cars letting others pay for the big depreciation. However, in recent years, I’ve noticed that the discounts on cars a couple of years old were minimal. Maybe dealers realized that people were using this tactic to avoid buying new cars.
I try to figure out how much a car is going to cost per year and use that a starting point. I make an assumption that a car should last around 12 years. So a new $36,000 car is about $3000 a year. If a car is already a couple of years old, it might only last 10 more years. I’d want to try to get it less than $30,000. Otherwise, I might as well get a new one.
- Get an Affordable Loan to Start With – It always helps to have a good credit score. After that, you’ll want to shop around and look for the best rate on a car loan. Fortunately, credit rates are still low. As long as you look like a responsible borrower on paper, you’ll should be in great shape.
- Choose the Right Car – This is an obvious one. There’s a big difference in price between our Subaru Forester and our Acura MDX. The Forester is good for muddy dogs, the beach, and trips around town. The Acura MDX is a better option for longer trips where we focus on comfort. If you can get by with a Forester-level of comfort, you can save a lot of money.