Top Tips to Save Money on Your Car

No matter how sporty your dream car may seem, buying a car is in no way a financial investment. The moment you leave the dealership your car will depreciate in value. While cars depreciate at different rates, it’s likely you’ll have sunk far more into the cost and maintenance of your vehicle than you will receive in its resale. Add to that the cost of fuel, maintenance and insurance, if you have multiple vehicles, a less-than-stellar driving record or a (gasp!) teenager on your plan, you’re looking at a major household expense.

But cars are also essential for many people and, in their own way, save us money, time and energy with the convenience and freedom they provide. The key is to have a handle on your budget, be informed about the real cost of owning a vehicle and take advantage of any discounts you can.

See if there are insurance discounts available

One of the simplest ways to save money on your car is to talk with your insurance agent about any ways to save on your monthly premiums. If you have home, life or other insurance policies with the same provider, ask about a discount for bundling your policies. You might also consider paying only liability insurance if you don’t have a car loan and can afford to repair or replace your car if you’re at fault in an accident. But weigh that decision carefully. Without a substantial emergency fund, comprehensive coverage is likely your best bet.

Thoughtful teenager tips

With a teenager behind the wheel, you can expect your premiums to increase dramatically, sometimes even doubling. That’s because young and inexperienced drivers bring with them a host of greater risks that your insurer is taking on. Still, some providers will lower those costs if your teen completes a driver safety course or maintains a certain grade point average. What’s more, while you may think putting your teen in the least expensive car possible is your best financial decision, keep in mind that newer models may be equipped with “teen driver” safety features. Those settings—like radio volume limits, speed monitoring and seat belt controls—may be a negotiating point with your insurance company. Call your insurance agent and see what they can do to help you save.

Reconsider subscription services

Speaking of newer models, the latest in subscription services like satellite radio, mobile connectivity and navigation features can be appealing options. However, those services can easily add hundreds of dollars to your annual car expenses.  When you think about it, drivers spent the first 100 years without those features and, with today’s cell phone podcast and navigation functions, you may just want those features more than you actually need them.

Save $$$ on gas

While choosing a smaller, more fuel-efficient vehicle will save you money at the gas station, you can still save money on gas in other ways. Driving less aggressively (contain yourself from those quick starts and stops!), keeping your tires inflated and filling up with lower-grade fuel are easy ways to save over time. Beyond shopping around for the best gas prices, consider using a rewards card for all gas purchases to give yourself an added bonus.

Avoid costly repairs

One of the simplest ways to avoid costly car repairs is to know about the car you’re driving. Start by reading the owner’s manual, regularly checking fluids and keeping your eye on any warrantees it came with. Preventive maintenance like changing the oil, replacing brake pads and maintaining tire pressure may save you from kicking yourself down the line. If you’re in the market for a new car, research the least expensive cars to maintain. (Spoiler alert: Toyotas and Hondas regularly appear on the top of those lists.)

Know the numbers before you buy

If you’re in the market for a new or used car, don’t let the car you happen upon sway you in the moment. Know how much you can spend before you hit the lots, get pre-approved for a low-interest loan before you talk to a dealer and know how much the car you are interested in is going for. If you’re trading in your old car, know how much you can expect for that sale, too.

One general rule is to plan on spending no more than 15% of your take-home income on the cost of a car and some 22% of your budget in total car costs (a loan, insurance, fuel and maintenance). In truth, that number varies greatly depending on your other expenses, including debt and additional vehicles. A car affordability calculator can help you make the best decision for your circumstances.

Negotiating a car sale is a complex business. Most people don’t do it often enough to feel as comfortable as the dealer they’re up against. Search the web for more tips on negotiating the price of your car. And at least keep in mind that weekends might not be the best time to shop for cars, as dealers are likely to have more customers competing for their attention. Meanwhile, the end of the month, year or sales quarter might find you with a sales person who is anxious to hit their personal sales goal.

Despite perhaps not driving your dream car, owning any car can feel like a luxury expense. Beyond the cost of the car itself, insurance, gas and maintenance are unavoidable costs to contend with. A little research, a few questions and some preventive steps will likely save you thousands of dollars and hours of stress in the long run. We wish you safe, and cost-effective, roads ahead!


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