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6 Car Buying Tips – See What U Can Save

Is there a new ride in your future? You’re no doubt wondering how to save a few bucks while still driving off the lot in a car that fits your needs and style. There are so many factors to consider when you go to purchase a car — and even more if you want to save some money. With a little extra effort and attention to detail, U can get the car of your dreams — at a dream price.
Graphic image that reads "6 Car Buying Tips" with cartoon cars in UMe colors
Whether you need to decide whether to buy or lease, or need help qualifying for a loan, we are here for U! Learn more about how we can get U in the driver’s seat today…

1. Know Your (True) Budget

Knowing how much you can afford – or, at least, how much you want to spend – is a key car buying tip for saving money. It’s pretty simple if you think about it: if you know how much you can spend, you’ll know if you’re veering over budget.

A good rule is to spend no more than 10% to 15% of your take-home pay (A.K.A. your net income) on a car loan payment. But it doesn’t stop there. Remember, your total car expenses include things like maintenance, insurance, gas, repairs, etc. These, in total, shouldn’t exceed 20% of your take-home pay.

The True Cost of a Car

When thinking about car-buying, don’t forget to consider the true cost of a car. As we previewed in the last paragraph, the cost of car ownership is much more than a down payment.

Financial calculators can help you determine the general costs of gas, repair, and maintenance in your area as well as how much car you can afford. But it may be worth it – and save you money in the long run – to go a step further.

For instance, monitoring your driving habits gives you a good idea of the mileage you can anticipate. In Southern California, mileage can stack up! You should also check out insurance quotes on the different cars you are considering. That way, you can get a pretty accurate picture of the true cost of a car, so you are prepared when you’re ready to purchase.

2. Know Which Car You Want

Knowing your budget is only half the battle. You need to know what you want out of your car to get the best deal.

Take stock of your situation and determine the type of vehicle that is best for you. Research the extras that may appeal to you and examine if you need them. Pinpointing your actual needs versus your wants will help you stay focused when you head into the dealership.

And don’t be afraid to be precise when you assess your vehicle! For instance, in researching options, let’s say you decide you want to pursue an electric vehicle (EV). That’s a whole other bag of numbers! Be sure you know what you can afford specific to the type of car you’re hoping to purchase. (Check out our article on EVs here.)

3. Consider All of the Options

When getting a car, you will have to answer some specific questions: New or used? Buy or lease? Weighing these variables can help you save some money when it comes to your final decision.

New or Used?

Is it financially better to buy a new or used car? That is a big question!

Let’s first take a look at the numbers. According to Experian, the average cost per month for driving a new car is $667 while a used car averages $515. That’s a pretty hefty difference.

You might assume that buying a used car will save you money. While it’s true that you may save on the initial purchase, and monthly costs may be lower at first — be sure to think about the cost over the entire life of your ownership, which should account for repairs and maintenance. That may end up costing you more if you purchase a used car!

Another consideration is the extras… If a new car with all the bells and whistles is over your budget, a used or pre-owned car with some upgrades may be right in your ideal range! A used car can save you money on some of these extras, even if it is on an older model. It’s really up to your personal preferences and financial situation.

Buy or Lease?

Whether to buy or lease is a major decision and can have a huge impact on spending.

While leasing a car can get you a new model at a lower upfront price, you’re not investing in anything. And if you just lease car after car, those payments can go on forever. If you opt to buy a car, there is at least an end date to your loan term.

It’s critical to consider your driving habits when deciding whether to buy or lease. Leasing may save you money at first but may not be the right financial decision for you depending on your driving needs and habits. Examine all options before making a decision. (Check out our article on Buying vs. Leasing here.)

4. Get Pre-Approved

So now that you know what you want and what you are willing to afford, why not take it one step further and start the pre-approval process? It’s not a bad idea! That way, you walk into a dealership prepared and ready to do business. (Which is what we always want for U!)

Getting pre-approved for an auto loan is a smart car buying tip because it sets you up with realistic expectations. A pre-approval is provided to you by a lender with terms and conditions to finance the purchase of a car. This makes it easy to estimate the total cost of the loan in line with your spending limits.

This ties right in with financing options. If you finance your car with a lender like UMe, you won’t have to worry about dealer financing. (Plus, you’ll make our day!) This could give you greater negotiating power at the dealership. You can also use our online calculator to figure out your monthly car payment!

5. Research + Negotiate = Success!

Don’t get us wrong – the best way to negotiate is to skip it. By skipping it, we mean having that pre-approval in hand, so going back and forth with a dealer over finances isn’t necessary. That being said, we have to admit that there can be ways to save money with good negotiation skills.

The smartest way to prepare for negotiation is to do your research. Write down the cost of the vehicle (or similar vehicles) at other dealerships, other deals or incentives, and online pricing in your hands when you walk into the dealership. They will often price match so make sure you know the price range of your car of choice.

Hot tip: Pre-approval and negotiation can go hand in hand. If you have that pre-approval lined up, the dealer will know what you are willing to spend and may work to make a deal.

Even hotter tip: Take advantage of Autoland Car-Buying Service, a free perk for UMe members. You can skip the dealership and negotiations altogether! Not only does Autoland help you find your next ride, they’ll negotiate the price, help you trade in your current vehicle, and much more. Best of all? This service is free to UMe members!

6. Go Over Specifics

Once all the decisions have been made and you’re ready to sign the final contract, take your time and review it. Go over any proposed fees and double-check that everything/anything you negotiated verbally is there on paper.

Check your notes about what you can afford, what you need, and what you want. Does everything line up? You may have to say no to some of those extras to stay in your price range, but the best car-buying tip of all is to drive away in a car that fits your needs and wants – and fits your budget!

Car Buying Tips Next Steps: Let UMe Get U in the Driver’s Seat!

At UMe, we want to help you get the car you want on the budget you set. Our financial professionals are here to help you do just that! Give us a call or shoot us an email today!

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Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!