How to Save Money When Buying 10 car monitor

Saving Money When Buying a Vehicle Quick Facts

• One of the best ways to save thousands of dollars is to pay for your car in cash. You’ll save on interest if you pay upfront for your vehicle.
• If you need to get a loan on a vehicle, look for monthly deals on financing or other incentives.
• You might want to go big, but you could save tens of thousands by sticking to a lower trim level on a vehicle. Also, be willing to walk away if you think you can do better

  or need to think.

In the current economy of higher interest rates and tighter credit, how can car shoppers save money when purchasing a vehicle? Use our checklist and money-saving tips to keep cash in your pocket and obtain the best car-buying deal. Use the jump links below to skip ahead.

How to Save Money When Buying a Car

19 Tips for Saving Money When Car Buying

Check out the different ways you can preserve your cash.

1. Pay Cash

One of the best ways to save thousands of dollars is to pay for your car in cash. You’ll save on interest if you pay upfront for your vehicle. For example, you could save as much as $3,100 on interest if you finance a 2024 Honda Accord Hybrid Touring (starts at $38,540) after making a down payment of 20% at 3.9% interest for 60 months.

2. Research

Do a deep dive into car research. Use Kelley Blue Book values from our sister company to get the fair market range for the vehicle you want to purchase. Compare models and determine what features you can do without to help lower the price point. If buying new, check expert car reviews from Kelley Blue Book, our sister company. You can search for reviews on cars you like dating back a decade or more and learn from our experts.

3. Look for Manufacturer or Dealership Financing Deals

Monitor the manufacturer and dealership financing deals and jump when you see an attractive low or 0% interest rate offer if your credit is spotless. If it’s not, read on for other ways to save money during car buying. 

4. Check Your Credit Score Before You Shop

If you know your credit isn’t the best, find out your score. If you can wait to buy a car and work on lifting your credit score, it could help you qualify for a better, lower interest rate if financing a car. It also helps to inform your budget.

5. Prequalify for a Loan

If you need car loan financing, check with different lenders for interest-rate offers on new and used cars before shopping. It helps you keep your budget in check and prevents you from overspending. 

6. Stick to a Budget

Use our car affordability calculator to know what you can afford and use that as a guideline when shopping for a car. It might save you thousands because you will not spend outside your budget.

7. Estimate Your Car Payment Before You Buy

In addition to using the car affordability calculator tool above, you can also estimate your vehicle payment before you buy using our auto loan calculator, plugging in the value of the vehicle, tax and interest rate, preferred loan term, down payment, expected trade-in value with the amount if any that you owe. It will estimate what you will pay monthly for the vehicle you want. Then, all you need to obtain is a car insurance estimate. If leasing, use our leasing calculator tool. The calculator also offers a leasing calculator option.

8. Calculate Car Insurance and Taxes

One way to save yourself money is to make sure you know your bottom line for car insurance and taxes before purchase. Request the VIN on the vehicle from the dealership or look for it online and obtain several car insurance quotes on the type of vehicle you wish to purchase (it doesn’t need to be the exact trim package). Many car insurers will provide quotes without pulling your credit. For taxes, you can find your state’s tax rate online through a quick search.

9. Consider a Lower Trim Level

By choosing a lower trim level, you could save thousands of dollars. For example, the 2024 Ford Mustang starts at about $31,000, and each trim level adds new features, with the highest trim package starting at more than $63,000. You might want to go big, but you could save tens of thousands by sticking to a lower trim level.

10. Compare New vs. Used

This one is tricky. These days, some new vehicles cost about the same as used if you finance a car due to higher interest rates on used vs. new. But deals can be had on less popular vehicles or those on car dealership lots they want to get rid of quickly. Just ensure you get it inspected by a certified mechanic. Buying a used car can help save thousands of dollars, especially if you pay in cash.

11. Get a Kelley Blue Book Instant Cash Offer on Your Trade-in Vehicle

Before you head to a dealership with a trade-in, shop your used car around with this one-stop-shop tool. Yes, you’ll get texts and emails from dealerships. But you can quickly see the value of your vehicle come to life with offers that potentially can be negotiated, especially if you decide to purchase from the same dealership. Before you trade, find the value of your vehicle.

12. Window Shop First

Before you settle on a vehicle, test drive several makes and models you like. It’s better to test drive and walk away before a salesperson pressures you into deciding on something right then and there. 

13. Consider an Outgoing Model

If you like a vehicle and there’s a new model year debut coming, use that as a trigger to buy the outgoing model. You might save several thousand dollars if the dealership is willing to bargain.

14. Be Willing to Walk Away

This is necessary if the pressure seems too great or you’re not ready. It also can be a calculated move. PRO TIP: I went to a dealership on a Tuesday evening, about an hour before closing, to test drive a few vehicles. Because the dealership was closing, there was no pressure to buy on the spot. It was easy to walk away. I did the same thing at another dealership the next weeknight evening. I was able to quickly determine the vehicle I preferred with the right features I wanted, including display size, wireless Apple CarPlay, and strategically placed USB-C outlets. Walking away gave me time to plan my negotiation strategy, texting with one dealership while in person at another in almost real-time. Ultimately, it saved me $8,000, including getting more money for a pickup truck trade-in. I used the Kelley Blue Book Instant Cash Offer tool to see what other dealers would offer and leveraged those prices on the spot. Offers stay valid for seven days, so you can do this step beforehand.

15. Shop Online and Check Prices at Multiple Dealerships

With your smartphone, check pricing at numerous dealerships and start communicating with a salesperson. Be ready to respond quickly, and don’t feel shy about using what one dealership offers versus another. You can buy your entire vehicle online, though most still prefer an in-person test drive. 

16. Trade In Your Older Model for Credit

If you have another car and it’s a highly sought-after model, trade it to the dealership and get the credit toward your new vehicle. In some states, it also reduces the taxes you pay on the car you purchase.  

17. Negotiate

If you see an add-on like paint and fabric protection you don’t want or need, negotiate that off your bottom line. If you know a dealer fee that adds hundreds of dollars, ask for a breakdown of what the cost covers. It just might save you up to a few thousand dollars. 

18. Lease a Car Instead

You may save money on a new or used car lease if you can’t afford an outright purchase. Check monthly leasing deals and look for low to no down payment options to save even more money.

19. Buy a Used Car from a Private Owner

When you purchase a vehicle from a private owner, you often can save thousands of dollars. Dealerships are in the business of making money. They will mark up the value of used cars to make profits. Autotrader’s Private Seller Exchange helps you buy cars in a safe and secure manner, while saving money in the process.

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Post by thx1138 » Fri May 02, 2014 10:19 am

Taylor Larimore wrote:

Don't buy too much house and don't buy too much car.

Bogleheads:

This quote is, of course, good advice. "Too much" of anything is bad. However, there is a fundamental difference between a house and a car: Houses appreciate and usually sell for a

profit

. Cars depreciate resulting in a

loss.

Big difference.

Bogleheads:This quote is, of course, good advice. "Too much" of anything is bad. However, there is a fundamental difference between a house and a car: Houses appreciate and usually sell for a. Cars depreciate resulting in aBig difference.

Thanks for the link and the usual sound advice, Taylor!

However, I'll object to the above as a gross simplification and a bit misleading as a result.

Imputed rent is still rent. That's true for a house just as much as for a car. If you have a need for transportation don't use more than necessary rent wise. If you have need for housing the same applies. Rent vs. own, lease vs. buy, it doesn't actually matter - real rent and imputed rent are both expenses and not investments.

Lastly, houses in fact do not usually appreciate well at all. They track inflation more than anything. In fact, land tends to go a bit above inflation while structures depreciate much like a vehicle depreciates. Structures have high maintenance costs just like vehicles. They have financing costs just like vehicles. They have occupation costs (energy) just like vehicles have use costs. They have insurance costs just like vehicles. In many places they have tax costs of the same order as vehicle registration costs. In fact if you look at the vehicles and houses and properly account for all their costs (including depreciation) they are surprisingly similar.

What is very different is that socially people are much more likely to spend stupid amounts on cars simply because they reflect a lower fraction of their income and assets. For most people it is hard to be too ridiculous about a house because they hit qualification limits. That said, if you do have flexibility in how much house you buy you can quickly lose more to imputed rent and taxes than you ever would leasing a Lexus every three years. And 90% of people won't even do the math and realize what a huge behavioral error they've made because the world keeps telling them housing is an "investment" or that it "appreciates".

That's the insidious part - I think most people realize when they buy a luxury car that they are doing something silly, but buy a big house and flush an equal or larger amount down the drain and many will still think they made a sound financial planning decision.

Thanks for the link and the usual sound advice, Taylor!However, I'll object to the above as a gross simplification and a bit misleading as a result.Imputed rent is still rent. That's true for a house just as much as for a car. If you have a need for transportation don't use more than necessary rent wise. If you have need for housing the same applies. Rent vs. own, lease vs. buy, it doesn't actually matter - real rent and imputed rent are both expenses and not investments.Lastly, houses in fact do not usually appreciate well at all. They track inflation more than anything. In fact, land tends to go a bit above inflation while structures depreciate much like a vehicle depreciates. Structures have high maintenance costs just like vehicles. They have financing costs just like vehicles. They have occupation costs (energy) just like vehicles have use costs. They have insurance costs just like vehicles. In many places they have tax costs of the same order as vehicle registration costs. In fact if you look at the vehicles and houses and properly account for all their costs (including depreciation) they are surprisingly similar.What is very different is that socially people are much more likely to spend stupid amounts on cars simply because they reflect a lower fraction of their income and assets. For most people it is hard to be too ridiculous about a house because they hit qualification limits. That said, if you do have flexibility in how much house you buy you can quickly lose more to imputed rent and taxes than you ever would leasing a Lexus every three years. And 90% of people won't even do the math and realize what a huge behavioral error they've made because the world keeps telling them housing is an "investment" or that it "appreciates".That's the insidious part - I think most people realize when they buy a luxury car that they are doing something silly, but buy a big house and flush an equal or larger amount down the drain and many will still think they made a sound financial planning decision.