Housing aside, car-related purchases are one of the most significant recurring expenses in our lives. Considering the high cost of insurance, repairs, and buying an actual vehicle, the car we ultimately decide to purchase should be worth the investment. So, before you set foot in a dealership, read up on some tips we’ve compiled to ensure you drive away with a vehicle you’re excited to have that doesn’t break the bank.

Do Your Research

Whether you’re set on a specific model or open to many, it’s essential to research the vehicle you are planning to buy before you make the trip to the dealership.

Take advantage of free online consumer reports to read up on safety ratings and owner reviews detailing reliability and features. Unlike relying just on information from a dealer, conducting your own research can save you from overspending, let alone driving out of the lot in a vehicle that doesn’t meet your standards.

Buy or Lease

Buying a new car presents us with many choices: Silver or black? Electric or hybrid? Esthetics aside, perhaps the most important choice is whether to purchase or lease your new vehicle, with each option presenting its own list of pros and cons.

Though buying a car consists of higher monthly costs overall, once you’ve paid off any loans, you own your vehicle, and you can use any equity towards purchasing a new one down the road. On the other hand, leasing presents the option of lower monthly costs and access to the latest models while allowing you to avoid the future hassle of selling your car.

Perks aside, the downside of leasing is you never stop paying for the vehicle as you’re not paying toward eventual ownership. There are also other restrictions such as the number of miles you can drive, customizations you can make to your car, or even what countries you can go to.

Consider how important it is that you drive a new vehicle; if you see yourself in the market for a new ride every couple of years, leasing may be your best option. On the other hand, buying may be your best bet if you are content with driving the same car over an extended period and you’d eventually like to drop a car payment from your monthly expenses.

Stick to a Budget

As soon as you enter the dealership, salespeople will try to upsell you with offerings of fancy add-ons, discounted models, and the latest lease options. Unfortunately, while some of these deals could potentially save you some cash, many of these offerings come with hidden downsides that can burn a hole in your wallet.

To avoid these situations, be sure to set an exact budget for your new car. A golden rule to make sure your new wheels don’t break the bank is to ensure your expected vehicle expenses are no more than 20% of your disposable income. When factoring in regular expenses like oil changes, gas, and repairs, monthly car payments should make up no more than 10%.

Suppose you’ve crunched the numbers and see these expenses adding up to a higher percentage. You may have to consider buying a different model or signing a different lease to ensure you have sufficient funds for other expenses. Of course, a viable option is to buy a car second-hand, and in today’s digital age, it’s never been easier to find a pre-loved vehicle that suits your needs.

Need Financial Advice?

Check out our previous blog post on Hidden Costs That Come With Your Dream Home. In addition, if you need personalized financial advice, our team is always here to help—contact us today to book an appointment!