7 Ways to Cut The Cost Of Your Car Payments
After a mortgage, buying a new car is one of the most expensive things we do. Regardless of whether you’re buying new or second hand, the chances are that most of us will need to resort to some kind of finance option (especially if you want the best deals).
One factor in the buyer’s favour is the huge number of vehicles available and the huge levels of competition between car dealerships. It doesn’t take much effort to find the cheapest car deals out there and the internet has made life so much simpler for bargain hunters. But any extra help we can get is always appreciated so here’s a list of the top 7 tips on how to save money on your car payments.
It seems obvious but many of us see what we like and buy it. Clothes, electronics, cars…. the retailers and show rooms have their marketing down to a tee – if you don’t buy now someone else will and your bargain is gone. Don’t be sucked into this marketing ploy. That Ford S-Max may be the last one in the showroom at the “best ever price” but there’s probably also another “last one” in another car showroom nearby.
Smartphone users – get smart. Pull up a list of your preferred supplier and take a look at other vehicle sellers in your area and see what offers they have online. If need be, get on the phone and start talking. At the end of the day, car sales are still relatively slow and the chances are that there are plenty of deals on the model you want to buy.
Reducing Your Car Loan Costs
If you’re going down the finance route your best bet is to get some money behind you. The more cash you can put up front the lower your repayment costs will be. Here are a couple of examples of loan calculators for you:
www.onlineloancalculator.org/ – the figures are in dollars – just do a one to one conversion.
http://autos.yahoo.com/car-finance/monthly-loan-calculator.html – another calculator showing figures in dollars but you get the idea.
For those of you that want a more comprehensive tool that displays figures in good old pounds sterling we’ll be creating a car loan payment calculator soon.
Haggling For Your New Car
For many of us, the idea of pushing for a bargain that’s exclusive to us is slightly alien. In the UK, most shoppers are prepared to take the price they see at face value. Having spoken to many friends, I know this to be true but now it’s time to take a leaf out of the Middle Eastern book and start haggling.
When it comes to car sales, the showrooms are making a very healthy markup (even in these cash starved times). We don’t begrudge them this profit, after all, they’re a business and a business that doesn’t profit withers! Here are a few tips to help you cut down the cost:
1. Ask for more money on your part exchange (assuming you have a car to PX)
2. If you’re buying second hand, haggle! Offer the sales person 8% – 10% less. If they say no, try a little less of a discount. Whatever you do, don’t blindly accept the windscreen price.
3. Compare, compare, compare! Take a look round all the dealerships in your local area and compare the prices. If you find a better offer nearby, then try to haggle the price down with your local car showroom.
4. If you have the resources, offer cash over finance and use this option as an incentive to cut down the price. This may not mean much to the dealer but it sure beats paying over the odds for finance.
Friends And Family
If you know someone that owns a car sales business then you’re in luck. If not then it’s time to start asking around. How many friends do you have? Do any members of your family know someone that owns or works in the industry? In many cases, sellers offer their employees a significant discount when they buy a vehicle from the company they work for. Without wanting to sound underhanded, take advantage of your good luck. The person that helps you out may not only get you a discount off the forecourt price but there could well be a bonus in it for them. If you don’t ask, you don’t get.
Using A Car Broker
I’ve been around a bit but this next tip was only revealed to me about 8 months ago – using a car broker. Here’s how it works: the broker buys vehicles in bulk from a company like Mercedes. By buying in bulk, they can get a heavily discounted purchase price. They then sell each model on to you and I for a competitive price i.e. 15% lower than your local dealer. Big smiles all round.
Whilst the idea isn’t new, a lot of buyers are a bit shy about using this approach but don’t be – you still have the same rights whether you buy through a local car sales outlet or a discount company.
Cutting Out The VAT
Currently, the UK rate of VAT is 20%. An £18,000 car will have an additional £3,600 added on to the overall price. Now, ask yourself, “Do I really need a new car?”
If you can live with a second hand car you’re going to make some huge savings on the price you pay. For a start, second hand cars are cheaper. They may have some mileage under the bonnet but, as long as the vehicle is within the recommended 12,000 miles per year you should be fine.
Second hand cars aren’t subject to VAT so the price you see is the price you pay.
Worried about warranties? Don’t be. Most suppliers of used vehicles will give you at least 3 months warranty on your nearly new car. Personally, I’ve bought one car from new and the 2 years that I owned it were not a shining example of “how to save money on car payments”!
As the name suggests, these are vast showrooms packed to the gunnels with both new and used cars. You’ll likely receive somewhat less personal attention than you might do from a franchised dealership and the haggling will be tougher but, if you know what you’re looking for, a car supermarket’s “stack-em high and sell ’em cheap” approach might be just the ticket.
7 ways to save money on your car payments – now it’s down to you kick yourself into gear and start saving.