How to Save Money and Get the Best Deal When Buying a Car

Buying a car can be challenging. Without proper knowledge, you can easily overspend and end up with a vehicle that doesn't suit your needs leading to financial strain or buyer remorse.

Fortunately, by learning how to save money and get the best deal possible, you can confidently navigate the car buying process and make a purchase you'll be happy with for years. 

That's where this ultimate car-buying guide comes in.

We'll explore steps to take to help you save money and get the best deal on your next car. 

Read Also: My First Car: Bitter Lessons from Skipping Due Diligence

1. Set a Budget

Before you start shopping for a car, set a budget. 

Your budget should consider your income, expenses, and other financial obligations. 

To set a realistic budget, you can use the 20/4/10 rule.  Here’s a breakdown of this rule:

• 20  - Put down at least 20% of the car's purchase price,
• 4    -  Finance the car for not more than four years,
• 10   -  Ensure your monthly car payment does not exceed 10% of your gross income.

This rule can help you avoid overspending and ensure that you can comfortably afford your car payments without straining.

Another factor to consider when setting a budget is the total cost of ownership. You'll also need to account for ongoing expenses such as fuel, insurance, maintenance, and repairs. 

By factoring these costs into your budget, you can better understand how much you can afford to spend on a car.

It's also a good idea to research the average price of the car you're interested in, so you have a realistic idea of how much you'll need to spend. 

Finally, consider additional costs such as taxes, registration fees, and any optional extras you want to include in your purchase. 

Read Also: The 7 Hidden Costs of Car Ownership in Kenya

2. Do Your Research

Are you looking for a fuel-efficient, spacious, or sporty car? Do you need a vehicle that can handle rough terrain or comfortably seat your entire family? 

By understanding your needs, you can narrow your search to a few models that fit your requirements.

One way to research cars is to visit online car forums and read reviews from other car buyers.

You can also use websites to research car prices and features.

When using online resources to research cars, verify the accuracy of the information you find. Some sources may not be up-to-date or may contain biased reviews. 

To get a more accurate picture, consider consulting multiple sources and getting recommendations from trusted friends or family members who have purchased cars recently.

Read Also: How to Figure If Something is Worth Spending On.

3. Look for Financing Options

If you have cash,  buy the car outright. Buying in cash is often the best option because you won't have to pay interest on a loan.

Alternatively, you can lease the car or finance it with a bank or MicroFinance loan. 

Here are some tips to keep in mind when choosing an auto loan:

• Compare interest rates from different lenders to find the best deal.
• Look at the Annual Percentage Rate (APR) to better understand the total cost of the loan.
• Consider the length of the loan term and monthly payments to ensure they fit within your budget.
• Check for any hidden fees or charges, such as prepayment penalties or origination fees.
• Get pre-approved for a loan before you start car shopping to understand better what you can afford.

Read Also: The Process of Car Financing in Kenya

4. Negotiate the Price

To negotiate effectively, it's essential to maintain a firm but fair stance. Start by making an offer lower than the asking price but not so low that it's insulting.

Remember that the dealer is also trying to make a profit, so you need to find a price that works for both parties.

One helpful strategy is to use incentives and rebates to your advantage. Dealers often offer these to attract customers, and you can use them to negotiate a lower price.

For example, if the dealer offers a cash-back rebate, you can negotiate to have the rebate applied to the car's purchase price. 

You can also request additional incentives, such as free maintenance or warranty extensions, to sweeten the deal. 

However, remember that not all incentives and rebates may apply to you, research and understand your eligible incentives before negotiating.

Lastly, be prepared to walk away from the deal if the dealer isn't willing to negotiate.

Read Also: Haggling: How to Bargain for the Best Deals in Kenya.

5. Close the Deal

Once you've negotiated a price you're comfortable with, it's time to close the deal. 

To ensure a successful closing, here are some additional tips to keep in mind:

• Don't feel pressured to sign the contract on the spot. Take your time to review it and ask any questions you may have.
• If you're financing the car, understand the loan terms and the monthly payment amount. Feel free to ask the lender to explain any confusing terms or conditions.
• If you're trading in your old car, ensure you have all the necessary documents and that the trade-in value is included in the contract.
• Consider purchasing additional warranties or insurance, such as gap insurance or an extended warranty, but weigh the costs and benefits before deciding.

Read Also: 10 Signs You Are Not Ready to be a Car Owner

Wrapping Up

In conclusion, buying a car can be a complicated and stressful process, but by following the steps outlined in this guide, you can make the process much easier and less challenging.

From setting a budget to negotiating the price and closing the deal, each step is essential and can help you save money on your new car.