10 Rules to Follow When Buying a Car on a Budget

If you’re anything like me, the thought of buying a car makes you cringe.  It’s a huge expense, and there is always the nagging worry that you either aren’t getting a good deal or aren’t getting a good car.  

While I can’t promise you can get a good car or a good deal, I can give you a few tips to make it more likely that you will get both.

  1. Buy used.  Brand new cars decrease in value as soon as they are driven off the lot.  I don’t care what rebates are offered, or end of year sales, or anything. Don’t do it if you are trying to get the most bang for your buck.  
  2. Figure out what you want and what makes sense.  Research the models you think are a good fit. Do they have a good track record?  What are the reviews on consumer reports? Ask people you know who own that type of car how they like it and why.
  3. Check with your insurance agent about rates on the type of vehicles you are considering.   You don’t want to have a nasty surprise when you call to switch your coverage.
  4. Ask about maintenance performed on the vehicle and any warranties that are in effect. Oh… and definitely find out the age of the tires.  Do the coin test on the tread so you know for sure. (Put a penny head down in the tread to see how much of Lincoln’s head shows. If you can see his entire head, it’s probably time to replace the tires.)
  5. Shop around for financing rates, if applicable.  Dealerships have a lot of options for financing, and there’s nothing wrong with using theirs, but it’s a good idea to check on your own first to make sure you are getting the best rate.
  6. Don’t pay sticker price at a dealership.  The dealership system is set up for negotiation and there isn’t a flat price to pay for a vehicle.   They expect you to negotiate.
  7. Don’t buy a car with a folder full of repair receipts.  I did this once thinking that the owners took really good care of the vehicle.  They did, but the car was also a lemon, and I doubled that receipt pile.
  8. Don’t tell a car salesman what payment amount you want.  Negotiate the total price of the vehicle instead. Once a long time ago I was looking at a car that had a per month price on the window.  I asked a salesman how much they were asking for the car and he pointed at the window and told me, “it says right there, $285/month.” For the rest of my life?  Or??? No thanks.
  9. Don’t buy a car with all of the bells and whistles unless you can afford costly maintenance down the road.  Fancy options and fast cars are really neat, and when all of that stuff starts to break, you will find your bank account drained at an alarming rate.  (Again, speaking from experience here.)
  10. A lot of these tips deal with buying from a dealership but don’t be afraid to buy from a private owner.  If a car is new enough to have a factory warranty, it will still transfer to you. Plus, nothing against car salespeople (somebody has to do it!), the procedures that most dealerships have in place are just tiresome and sometimes insulting.  You can avoid that buying from a private owner.

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