Car shopping, while exciting, tends to also pack on quite a bit of stress. Said stress only builds when you’re dealing with a restrictive budget that can severely limit your options. Here are some tips and suggestions on how to manage your expectations when you’re car shopping on a budget and how to make the most out of what you do have available to spend.
Put your Needs before your Wants
Make two lists: one that details everything you absolutely need in a car and a separate one listing the things you want. If any of the items from your ‘want’ list happen to correspond with your ‘needs’ list, awesome! But be prepared to completely disregard the rest of your wants when it comes time to actually buying your car.
As pleasant as the thought of driving around in a car with leather seats, handsfree bluetooth controls, seat warmers, and fingerprint sensors in the door handles may be, it’s not realistic. If you’re car shopping on a budget, you need to be thinking about functionality, practicality and safety. If you can also afford to throw in an item or two from the wants list that’s great but don’t discount a perfectly good car because it doesn’t have built in seat warmers.
Make a Budget
Sit down and crunch all the numbers. See how much money you actually have to comfortably spare a month for car payments. Don’t let yourself sacrifice anything important; make sure you put aside enough to cover food, rent, utilities, internet, and payments for any other loans or bills you might have.
When car shopping on a budget, make sure said budget is realistic. You shouldn’t be spending more than 10-15% of your total monthly income on your car or on any car-related expenses (insurance, maintenance etc). Make sure to base your budget on the total cost of your car and not the monthly payments the car dealership will offer you. They can make a really expensive car seem affordable by spreading out the payment overs a much longer period of time. This is a bad idea – you’ll likely end up in an upside down loan.
Don’t Stray from you Budget
When you actually arrive at the dealership, you’re going to see a lot of tempting offers. No matter how good of a deal the dealer claims they can get you, don’t listen. Stick firmly to what you can afford so you’re not stuck with a car purchase you regret.
Make sure you take other financial information into account too – how much will your car cost you in taxes, insurance, and other associated monthly costs? Can you still comfortably afford it? Make sure to research the models you’re interested and get a quote from your insurance company ahead of time to make sure your rate isn’t going to rise too high (newer cars cost more to insure). This is especially important if one or more of your kids counts as an occasional driver because their rate will likely shoot up too if you’re moving to a new car.
Secure Your Financing Ahead of Time and Get Pre-Approved
When car shopping on a budget, don’t wait until you’re at the dealership to look into financing. You will almost always get a better loan/better terms from your bank or credit union than you will from the dealership. Even if your credit isn’t that great, it’s better to shop around a bit than just accept the conditions the dealer offers you.
If you want some time to think it over before committing, the best time to go to the dealership to browse is on a weekday afternoon. This is a great time to ask about any sales, discounts, or rebates that you might be eligible for (you should also do your own research online first before walking in).