If you’re in the market for a new car this year but you’ve never bought a car before and are unsure about how to start looking for one or what to look at, we can help. Buying a new car can be intimidating to some people, so we put together our list of 6 critical tips for setting a budget.
1. Leave Room to Cover Extra Expenses
When setting a car budget, it’s important not to put all of your excess money in your new car fund. You still need to be able to cover extra expenses whether they’re related to your car or not. You should still have money set aside for savings and emergencies. While you might afford the car of your dreams by spending everything, having your dream car won’t help you when emergencies arise, and you need to rely on your rainy day fund.
2. Research a Car’s Worth
The better you know a car’s worth, the better your chances of getting a deal on it. First, you need to know how much the vehicle is worth in its current condition. Look at what similar cars are selling for and research their values so you have a good range of what you can expect to pay for your new vehicle. If there are any specific features you want or don’t want and they will cost more than usual, you should also account for those.
3. Try Negotiating with the Dealership or Car Owner
You can try negotiating the price of the car, but research will be your biggest tool. Proper research can also help you understand what a fair price is to offer to the dealership or individual selling the vehicle. If they’ve already priced the car at or below what they think it’s worth in its current condition, offering them less will be easier because they won’t feel like you’re trying to rip them off. It will also allow you to determine the price range the car in question is generally in and give you an idea of how far above or below the normal range it may be. If something important to you is extra features or better color, bargain with them until they’re willing to give you that option.
4. Think about a Car’s MPG and Gas Costs
If you’re looking for a car built for fuel efficiency, then that’s something you need to keep in mind. It will also help with your budget when looking at gas costs. It will be more expensive to drive a vehicle with poor gas mileage; even if it’s not bad, it could still be worse than what you’re currently driving. If you can’t find the information, ask the dealer or whoever is selling the car if they have any information on the vehicle’s gas consumption.
5. Don’t Forget to Factor in Insurance Costs
You should consider the insurance costs if you plan to finance your new car. At least if you’re paying for it outright, it’s a good idea to know what you’ll be spending to prepare for your budget. Because there are so many variables involved in insurance costs, it’s better to find the price based on similar vehicles or those similar in size and features to the one you’re looking at.
6. Figure Out the Overall Costs and Monthly Costs
Once you’ve gathered all the information and figured out your budget, you need to think about how much that car will cost overall and monthly. Think about how much maintenance it will take and any special features that come with an extra cost. You also need to factor in extra costs like insurance and routine maintenance such as oil changes.
Researching the vehicle is the key to finding a great deal on a new car. You can do this in-depth before seeing the vehicle; it may save you tons of money. At the end of it all, with careful research and planning, you may be able to find that dream car below your budget.
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