There are many easy ways to save money on a car, both when purchasing the vehicle and during ownership. Here are some simple terms to keep in mind. Even remembering just one or two may save you some cash.
When buying a car …
Incentives
Automakers and dealerships often run special offers to knock down prices or provide savings over time. These include rebates, which give cash back that can be applied to the price of the vehicle, and other incentives such as zero percent interest financing.
Preapproval
It helps to know about preapproval as you enter the financing process. Getting approved for an auto loan before visiting the dealership is a smart way to look for the best financing deal and compare offers. Loan papers in hand, customers can confidently negotiate the price of a car knowing the terms of their loan.
Book value
This is the value of a used car according to valuation sources like Kelley Blue Book. If you have a car to trade in, check the book value to agree on a fair price with the dealership. If selling privately, look up the private-party value, which may be higher.
Fuel economy and MPG
Look for the “Fuel economy and environment” section on a new-car window sticker to see fuel economy ratings, miles per gallon figures, annual fuel cost and how much you’ll save or spend on fuel over five years compared to the average model.
Depreciation
While all cars lose value, it’s quickest among new cars which lose 20 percent in the first year after purchase. With depreciation in mind, many buyers choose a used vehicle after someone else has taken the biggest hit. iSeeCars.com recently revealed the top lightly used cars to buy used over new.
Resale value
If you opt for a new car, choosing a vehicle with a better resale value than other options will minimize the effects of depreciation and potentially save you thousands of dollars when it comes time to sell. KBB’s resale value awards pick out the best brands and vehicles after five years of ownership.
Auto finance calculators
A little time using loan calculators lets you work out what may be affordable when planning a purchase, and understand where you might trim costs. Estimate a potential loan amount and monthly payment, and see how they change by adjusting terms like interest rate, loan duration and down payment.
Co-applicants and cosigners
If you have little credit history or bad credit,* you typically face paying more for your money when financing. When you fill out an application, consider adding a co-applicant, for a joint auto loan, or cosigner to improve the chances of approval and, if approved, a lower interest rate.
Sales events
Dates on the calendar like Columbus Day, Black Friday, Christmas and New Year are some of the best times to get a deal on a new or used car thanks to sales events. Black Friday is particularly high profile and kicks off a holiday season of savings running through New Year.
After you’ve purchased a car …
Early payoff
Pay off your note early and you may save on interest charges, but check for any prepayment penalties in your contract. An early payoff could be made through a single large payment or a number of extra payments to pay down principal, for example.
Refinancing
If you’re paying more on your loan than you want, think about refinancing for new terms. If approved, you may be able to drop your monthly payment, interest rate or both.†
Routine maintenance
Remembering regular maintenance, scheduled at mileage intervals, is important to keep a car running smoothly and prevent costly repairs down the road. From oil changes to break-pad replacement, your car manual should help with what needs doing and when.
Tune up
What exactly is a tune up? It’s a type of maintenance that normally involves replacing spark plugs to keep the engine happy. It may also include other services depending on the car and the garage doing the tune up.
Tire rotation
Simply rotating the tires will ensure more even wear and prolong their life, saving you from shelling out on new ones so often.
Defensive driving
Practicing safe driving, like being aware of your surroundings and anticipating potential hazards, helps to prevent collisions and their expense, as well as improve your safety.
Regular fuel
Are you treating your favorite car with premium gasoline when it’s time to fill up? Most cars don’t need it, so, unless your automaker recommends a high-octane gas, using regular fuel will save cash.
* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.
† View disclosures and offer information.
RoadLoans does not accept applications for refinance the loans of existing Santander Consumer USA and Chrysler Capital customers.
Written by:
With 10 years of experience in auto finance, Rob Looker helps car shoppers find the right vehicles with the right financing so they can enjoy the road ahead. When he’s not creating content, he’s often behind the wheel, exploring new…
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