Quick facts on saving money on a vehicle:
- One of the best ways to save thousands of dollars is to pay for your car in cash. You’ll save on interest if you pay upfront for your vehicle.
- If you need to get a loan on a vehicle, look for monthly deals on financing or other incentives.
- You might want to go big, but you could save tens of thousands by sticking to a lower trim level on a vehicle. Also, be willing to walk away if you think you can do better or need to think.
In the current economy of higher interest rates and tighter credit, how can car shoppers save money when purchasing a vehicle? Use our checklist and money-saving tips to keep cash in your pocket and obtain the best car-buying deal.
Plus: Here’s your ultimate list of best-buy cars, trucks, SUVs and EVs for 2024
How to save money when buying a car
1. Pay cash
One of the best ways to save thousands of dollars is to pay for your car in cash. You’ll save on interest if you pay upfront for your vehicle. For example, you could save as much as $ 3,100 on interest if you finance a 2024 Honda HMC, -0.29% Accord Hybrid Touring (starts at $ 38,540) after making a down payment of 20% at 3.9% interest for 60 months.
2. Research
Do a deep dive into car research. Check Kelley Blue Book values to get the fair market range for the vehicle you want to purchase. Compare models and determine what features you can do without to help lower the price point. If buying new, check expert car reviews. You can search for reviews on cars you like dating back a decade or more and learn from our experts.
Read: The most and least reliable car brands for 2024, according to Consumer Reports
3. Look for manufacturer or dealership financing deals
Monitor the manufacturer and dealership financing deals and jump when you see an attractive low or 0% interest rate offer if your credit is spotless. If it’s not, read on for other ways to save money during car buying.
4. Check your credit score before you shop
If you know your credit isn’t the best, find out your score. If you can wait to buy a car and work on lifting your credit score, it could help you qualify for a better, lower interest rate if financing a car. It also helps to inform your budget.
5. Prequalify for a loan
If you need car loan financing, check with different lenders for interest-rate offers on new and used cars before shopping. It helps you keep your budget in check and prevents you from overspending.
6. Stick to a budget
Use a car affordability calculator to know what you can afford and use that as a guideline when shopping for a car. It might save you thousands because you will not spend outside your budget.
7. Estimate your payment before you buy
In addition to using the car affordability calculator, you can also estimate your vehicle payment before you buy using an auto loan calculator, plugging in the value of the vehicle, tax and interest rate, preferred loan term, down payment, expected trade-in value with the amount if any that you owe. It will estimate what you will pay monthly for the vehicle you want. Then, all you need to obtain is a car insurance estimate. If leasing, use our leasing calculator tool. The calculator also offers a leasing calculator option.
8. Calculate car insurance and taxes
One way to save yourself money is to make sure you know your bottom line for car insurance and taxes before purchase. Request the VIN on the vehicle from the dealership or look for it online and obtain several car insurance quotes on the type of vehicle you wish to purchase (it doesn’t need to be the exact trim package). Many car insurers will provide quotes without pulling your credit. For taxes, you can find your state’s tax rate online through a quick search.
Read: How electric vehicle tax credits will work in 2024, and a list of cars that qualify
9. Consider a lower trim level
By choosing a lower trim level, you could save thousands of dollars. For example, the 2024 Ford F, -0.48% Mustang starts at about $ 31,000, and each trim level adds new features, with the highest trim package starting at more than $ 63,000. You might want to go big, but you could save tens of thousands by sticking to a lower trim level.
10. Compare new vs. used
This one is tricky. These days, some new vehicles cost about the same as used if you finance a car due to higher interest rates on used vs. new. But deals can be had on less popular vehicles or those on car dealership lots they want to get rid of quickly. Just ensure you get it inspected by a certified mechanic. Buying a used car can help save thousands of dollars, especially if you pay in cash.
See: Odometer fraud is on the rise—how to protect yourself
11. Get an instant cash offer on your trade-in vehicle
Before you head to a dealership with a trade-in, shop your used car around with a one-stop-shop tool. Yes, you’ll get texts and emails from dealerships. But you can quickly see the value of your vehicle come to life with offers that potentially can be negotiated, especially if you decide to purchase from the same dealership. Before you trade, find the value of your vehicle.
12. Window shop first
Before you settle on a vehicle, test drive several makes and models you like. It’s better to test drive and walk away before a salesperson pressures you into deciding on something right then and there.
Check out: Some good trends are happening in car affordability
13. Consider an outgoing model
If you like a vehicle and there’s a new model year debut coming, use that as a trigger to buy the outgoing model. You might save several thousand dollars if the dealership is willing to bargain.
14. Be willing to walk away
This is necessary if the pressure seems too great or you’re not ready. It also can be a calculated move. PRO TIP: I went to a dealership on a Tuesday evening, about an hour before closing, to test drive a few vehicles. Because the dealership was closing, there was no pressure to buy on the spot. It was easy to walk away. I did the same thing at another dealership the next weeknight evening. I was able to quickly determine the vehicle I preferred with the right features I wanted, including display size, wireless Apple AAPL, +0.05% CarPlay, and strategically placed USB-C outlets. Walking away gave me time to plan my negotiation strategy, texting with one dealership while in person at another in almost real-time. Ultimately, it saved me $ 8,000, including getting more money for a pickup truck trade-in. I used the Kelley Blue Book Instant Cash Offer tool to see what other dealers would offer and leveraged those prices on the spot. Offers stay valid for seven days, so you can do this step beforehand.
Also see: 10 new SUVs coming soon—and worth the wait
15. Shop online and check prices at multiple dealerships
With your smartphone, check pricing at numerous dealerships and start communicating with a salesperson. Be ready to respond quickly, and don’t feel shy about using what one dealership offers versus another. You can buy your entire vehicle online, though most still prefer an in-person test drive.
16. Trade in your older model for credit
If you have another car and it’s a highly sought-after model, trade it to the dealership and get the credit toward your new vehicle. In some states, it also reduces the taxes you pay on the car you purchase.
17. Negotiate
If you see an add-on like paint and fabric protection you don’t want or need, negotiate that off your bottom line. If you know a dealer fee that adds hundreds of dollars, ask for a breakdown of what the cost covers. It just might save you up to a few thousand dollars.
18. Lease a car instead
You may save money on a new or used car lease if you can’t afford an outright purchase. Check monthly leasing deals and look for low to no down payment options to save even more money.
Also see: The 9 things that are most likely to affect your auto insurance rates
19. Buy a used car from a private owner
When you purchase a vehicle from a private owner, you often can save thousands of dollars. Dealerships are in the business of making money. They will mark up the value of used cars to make profits. This Private Seller Exchange helps you buy cars in a safe and secure manner, while saving money in the process.
This story originally ran on Autotrader.com.