Today, people under the age of 25 are much likely to drive cars of their own than at any time in the last three decades. And more and more young people are finding themselves in trouble for not having enough knowledge about owning a car. A few decades ago, insurance companies gave too much leniency to these young drivers.
They began covering their vehicles at a reasonable rate only to find themselves in a deep financial hole. Suddenly, insurance rates for young drivers shot up. So, where do all these leave the starters now? How to save money, while still paying for the purchase, maintenance, protection and everything else? Let us find out.
- Negotiate Your Car Price
If you are new in the car market, it is important to know how to negotiate car price. Google the model and see what local dealers are offering for the same vehicle. Maybe you will be able to get the same vehicle from one dealer with $1,500 knocked off from another. While the savings may look amazing, you may not be offered perks like labour warranty, free mats or other discounts. So, avoid being ripped off on a car dealer based solely on the sticker price savings.
- Shop Around For Car Loans
If you can’t afford to pay by cash, you can get a car loan from the dealer, bank or credit unions. To get a sense of what rate you qualify and which source of loan works the best for your situation, shop around. Car dealers tend to charge high-interest rate to compensate for the perks and discounts they are offering, whereas credit unions carry lower rates on car loans. Either way, do some research. Most financial institutions knock off a percentage of the rate if you sign up to have the monthly payment deducted automatically from your account. Other lenders will reduce the rate based on your credit score, debt and employment status.
- Rebate Vs Low Rate – Do your Math
Often the dealer wants to know what monthly payment you can afford. Before you discuss this number, make sure to stick with a particular purchase price. If the dealer knows your affordability, he or she will try to recalculate the rate by adjusting or extending the terms, which means you are on the losing end. To avoid this situation, be adamant about what price you will be paying for the car.
Once this is done, look for any rebate offered by the manufacturer or agency itself. Nevertheless, determine the pros and cons of rebate versus the low rate of interest on the loan. If possible, steer clear of low down payment. The lower the down payment, the bigger your monthly payment will be and you will end up paying more on interest over the course of the loan.
- Protect Your Car With Insurance
The point of car insurance is to protect you, your family and your car from financial loss due to accident or other incidents. The premium that you pay every month, quarterly or yearly vary from one insurance company to another. But here is the thing: Having insurance is as important as having your driver’s license. For car owners who are young, this premium tends to be on the bigger side due to driving record, age and risk factors.
You can either buy insurance directly from the insurer or through an agent who works for single or multiple insurance companies. Companies that don’t sell through agents often charge less in terms of premium as they don’t have to pay overhead. Again, make sure to cover the most basic things from insurance, such as collision coverage, emergency and uninsured motorist coverage as required by some states.
- Maintain Car As Required
Car insurance includes liability protection among many other things, but it won’t pay for maintaining the vehicle. So, expenses such as oil change, air filter replacement, tire replacement, engine checkup and other maintenance tasks are your responsibility. It is important to maintain your car regularly to get the best out of gas mileage and overall efficiency. Sometimes the additional cost is only $50 per year, other times it may run up to thousands of dollars.
- Pay Your Monthly Bills On Time
It is very tempting to save on insurance policies or car loan premiums by skipping payments. The last thing you want to do is have your dealer or lender tow the car while you are scheduled to attend an important business meeting. You are better off investing in car payments than saving a few hundred dollars. Insurance companies can be harsh against non-payers.
At this point, you have learned some of the basic information you need to enjoy your car. If you just can’t get enough, there are plenty of resources online and a few selective recommendations from experienced car owners that may interest you.