Having a car is necessary to being able to get anywhere in a timely manner in many places. Owning a car, however, can be an incredibly expensive prospect. There’s the price of the car itself, the cost of upkeep, the price of insurance, and gas to pay for. With the expenses piling up, what can people do to make car ownership more affordable?
Pay in Cash
When people purchase a car, most of them purchase it through the acquisition of a loan. Relatively few pay in cash. It’s not typically convenient to do so, and banks and dealerships make more money off of you if you take out a loan, so there is often pressure to not pay in cash. If you can manage it though, you’ll be doing yourself a financial favor. Paying for a car in cash means you don’t own anyone any interest, which can save you from paying thousands of dollars over the life of a car loan. If your circumstances allow you to pay for your car in cash, it’s well worth considering.
One of the things you can do to make purchasing a car more affordable is to buy a gently used car. Cars only depreciate over time, and pretty significantly as soon as you drive it off the lot. Purchasing a used car instead of a new one means you’ll be paying a lot less for the actual car itself. Because you’re purchasing a used car, it’s important to know what to look for. You don’t know the details of what the car went through before you got to it, and it’s not a good idea to just take the previous owner’s word for the condition of the vehicle. You don’t want to end up with a lemon just because you wanted a good deal on the purchase price. You’ll end up literally paying for it down the road.
Get the Most Out of It
Many people have adopted the practice of buying a car, driving it around for a few years, then trading it in or selling it and buying a new one. This tends to happen far in advance of when the car would be considered to be on its last legs. Continuing to purchase cars unnecessarily can really drive up the cost of ownership though. If you instead purchase a car, take good care of it, and continue to drive it for a long time, you can save yourself thousands of dollars. At some point, you’ll need to evaluate whether the price of a new vehicle is worth paying instead of the cost to maintain the vehicle, which tends to climb as the car gets older. Once the maintenance costs reach the point where they aren’t worth paying anymore, it’s definitely time to look at buying a new car.
Follow the Maintenance Schedule
Properly maintaining your car can help reduce the cost of car ownership. Sure, you have to pay money for parts and labor to maintain it, but that’s usually much less expensive than the repairs you would need to pay for if you didn’t maintain it. If you want to save some money, you can perform basic car maintenance tasks yourself, which will cost you in parts and in your own time, but you won’t have to pay a mechanic for their labor. Proper car maintenance requires following the maintenance schedule recommended by the manufacturer. You should be able to find this in the owner’s manual that came with your car. Some of this maintenance will require you to replace components of your vehicle from time to time. When you do, make sure you get quality car parts to replace them with. Original equipment is best because third-party auto parts can cause performance issues. Again, this tends to result in more expensive repairs being needed later on, plus the need to replace those parts again.
Even if you know exactly what you want in a new car, it’s a good idea to shop around. Chances are you’ll have multiple vehicles to choose from based on your preferred make, model, year, trim, and even color. Different dealerships or private owners will have different prices. You may be able to use that information to haggle down the price even further. The lower you can make the purchase price, the better off you are financially.
Pay It Off Early
If you aren’t able to pay for your car in cash and need to take out a loan for it, you’ll end up paying interest, but you can take measures to reduce the amount of interest you end up paying for the car. Paying the loan off early reduces the amount of time during which interest can accumulate, thereby saving you from having to pay more of it. Depending on the price of your loan and how much extra you put towards the principle, you could end up taking a couple of years off of your loan term. You do need to make sure the extra money goes towards the principle and not interest in order for this to work. That may require putting any extra you’re paying into a second payment.
Another thing to watch out for is loans with prepayment penalty fees. Because they aren’t getting as much money from you, some institutions will charge you a fee for paying off your loan early. Be sure to ask about this before you take out the loan. Depending on the cost of the fee and how much you’re saving on interest by paying it off early, this still may be an option worth pursuing.
Look for Insurance Discounts
Your car insurance is another place you can look at to help lower the cost of car ownership. Just because you’re quoted one number based on the make, model, and year of your car doesn’t mean that’s what you end up paying. There are actually a few things you can do to lower the cost of car insurance. Different insurance companies may offer different car insurance discounts. Having safety and antitheft features, keeping your car in a garage, being a safe driver, and being a long-time customer of that insurance company may help you get a better price on your auto insurance.
Owning a car is often something of a money sink, but there are things you can do to make it less expensive. By making smart financial decisions when purchasing one, continuing to make smart financial decisions afterward, and taking care of it properly, you can reduce the cost of car ownership. You won’t be able to eliminate expenses entirely, but you should be able to lower your car-related expenses to a more affordable cost.
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