It’s not just about minimizing your car loan repayments.
- Car prices are skyrocketing this year.
- Spending less could mean savings on car insurance.
Nowadays, inflation makes almost all living expenses more expensive. And that extends to cars.
In January, the average new car sold for $46,404, reports Kelley Blue Book. Since vehicles are in limited supply (thanks, chip shortage), dealers get away with charging buyers a premium.
If you are planning to buy a new car this year, it is worth keeping your costs to a minimum. Not only could this help you manage your car loan better, but it could also make your car insurance cheaper.
Do your best not to spend too much on a car
Car prices are simply high across the board, so if you need a vehicle, you may have no choice but to spend more than usual. But that doesn’t mean you can’t take certain steps to save on a new car, namely, not choosing the most expensive model to start with and forgoing some of the many upgrades that dealers will no doubt try to sell you.
The more money you spend on a car, the more you’ll pay each month through an auto loan. And higher loan repayments could really strain your budget. So if you’re considering upgrading your car with heated seats and extra speakers, you might want to reconsider whether that adds to your loan repayments.
You are also likely to spend more to insure a more expensive car than a cheaper car. The reason? If a more expensive car is wrecked, it will likely cost more to fix or replace it.
And if you’re thinking of spending more to take advantage of some of today’s added security features, think again. Not only might these features not qualify for a car insurance discount, they might actually add at your expense by serving as another technical element to be repaired or possibly replaced in the event of damage.
Proceed with caution
When you buy a house, there is a good chance that its value will increase over the years, so when you go to sell it, you will make a profit. But cars work in the opposite direction.
A new car loses a lot of its value the moment you take it out of the lot. And in most cases, cars depreciate in value year after year, so if you decide to sell your vehicle seven or eight years later, you’ll get a lot less than you paid for.
That’s why it really makes sense to spend as little as possible on a car. That doesn’t mean you have to skimp on comfort or safety. Instead, you should find a car that meets your basic needs and requirements, but at the most affordable price.
Spending less on a car will free up money for other bills and goals, like building up a retirement nest egg. If you manage to reduce your purchase costs, you could save a lot of money on your car insurance, especially if you have a good driving record and good driving experience.
Make sure you choose the right auto insurance coverage
Car insurance is something most people don’t think about very often. Although there are many factors that lead people to change car insurance companies, it is important to educate yourself to ensure you choose the right coverage for you. The right coverage means not paying for coverage you don’t need and not giving up coverage that is right for you. Although price is a major factor, we also consider other factors such as customer service and the claims process when choosing what we believe are the best car insurance providers.