Tips, Tricks & Trends

Your Monthly Car Payment Isn’t the Only Important Thing in Car Buying

Buying and owning a car can be very expensive. In September 2019, the American Automobile Association (AAA) found that the average annual cost of owning a vehicle was $9,282. One of the biggest vehicle expenses, obviously, is purchasing one. It’s not the only one though. There are some ways to save money when buying or financing a vehicle if you know what to look for when doing your research.

Don’t look only at the monthly payment amount when car shopping

RELATED: What Is the Average Monthly Car Payment?

While the monthly payment amount is super important, and it does need to fit into your budget, it isn’t the only factor to consider when negotiating to buy a vehicle. Instead, figure out what the total cost of the vehicle will be. To do this, multiply the monthly payment by the number of months in the loan term. Then add that amount to the down payment and your trade-in value. Because of interest, the number will be higher than the vehicle’s sticker price. Having this amount from multiple dealerships or banks will let you compare total costs instead of just the monthly payment amounts.

Keep in mind that, according to AAA, a loan costs about $1,000 extra for every 12 months added to the loan term. Also, U.S. News & World Report recommends not sharing your ideal monthly payment with the dealership. Unscrupulous sales associates may decide to increase their profit by recommending a different financial offer or pushing you to select optional features, packages, and warranties.

Have an idea of the total cost of ownership

Cars in a dealership lot. | Andrew Spear for The Washington Post via Getty Images

The monthly car payment is important, but it’s not the only car-related cost. Before buying a new vehicle, it’s important to be aware of other costs, like fuel efficiency or premium fuel requirements, auto insurance, maintenance, and parking. Find out what the estimates would be each month in these categories and see if they will fit into your budget along with the monthly car payments.

Being aware of potential costs can help buyers avoid being talked into a more expensive car at the dealership. Make sure to focus on getting the right car for you. This means getting a reliable car that meets your needs and fits your budget.

What to research before buying a car

It’s important to do your research before visiting the dealership. This helps make sure you find that car with good ratings, the features you’re interested in, and the costs you want. It can also help you compare financing options and insurance costs. Edmunds, KBB, and Consumer Reports are great places to find information about different vehicles. The EPA also shares its ratings to help buyers check on a vehicle’s fuel efficiency.

You may get a better deal selling your own car rather than trading it in, and you may find a better loan through a bank or credit union. It’s possible to get pre-approved for a loan before making your car purchase. Selling your car to a used car seller is another option to look into prior to visiting the dealership too.

It’s even possible to buy online and request home delivery of your new vehicle. Lastly, talk with your insurance company about the insurance costs for different vehicles, and make sure you’re happy with your coverage and deductibles.

There are a lot of ways to reduce the amount you pay when purchasing a new vehicle. Be sure to take your time, do your research, and resist any pressure from the dealership. Don’t be afraid to walk away if you feel like you’re getting a bad deal.