HEELS ON WHEELS: MONEY-SAVING CAR TIPS FOR WOMEN
By Katrina Ramser
San Francisco Bureau
The Auto Channel
Saving money on cars is a road with many twists and turns, but we've complied a variety of tips to get you started. Whether you are buying new, used, or trying to make the most out of your current wheels, these money-saving car tips are designed to keep your car budget out of the red.
Always remember a car is a depreciating asset. No matter how cool the ride, the moment you drive a vehicle off the lot it looses 20 percent of its value and just continues to go down. With that being said, your strongest purchase combines a well-known car model made by a reliable auto manufacturer, such as a Honda Civic or a Toyota Camary.
Treat your car like you treat your skin. If you give life to this object, chances are you'll treat it better. Keep your car out of the sun (heat can evaporate gas as well as warp leather). Wash it when it needs it and learn to perform routine maintenance. This also means finding a trustworthy mechanic who won't try to rope you into a lot of extras – shop around and ask friends for referrals.
Keep the car forever if you plan to buy new. Buying a new car and driving it until the wheels fall off is often the most sensible and lowest cost solution. Once you pay off a car loan, you're freed up to deposit a fraction of that monthly sum into a Car Repair/New Car Fund, dropping money into a designated high-interest savings account and putting yourself into a position to pay cash for everything car-related. Your insurance goes down as the car gets older.
Skip most upgraded or optional vehicle packages and trim levels. Car models come in certain trims, from basic to luxury, so choose frugally, skipping technology comforts like an interactive navigation screen, second-row DVD player, hands-free Bluetooth, and XM radio. These items require more maintenance and could become outdated as the years go by. Also, do you really need heated leather seats? Splurge on safety features instead.
Finance a car for 3 years or less. Elongate a loan and you're setting yourself up to throw a lot of money away on interest. If you cannot afford 2-3 year lease, perhaps you're looking at the wrong car for your budget. Search here on The Auto Channel for a vehicle that fits your needs in terms of budget, gas, safety, and hybrids!
Choosing between a zero-percent financing or cash-back options depends on the price of the car. Suze Orman, financial author of such best-seller books such as Women & Money, advises taking cash back if the car is under $20,000. But opt for a zero APR rate if the car costs more – with an interest rate of 5.9% or lower, you'll pay less over the life of the loan rather than what a cash back reward might offer. Play with the figures and do the math.
Know a new car's bottom line price – and make it yours. Focus on the invoice price, not the manufacturers suggested retail price (known as MSRP). Keep in mind you are not obligated to pay anything you aren't legally tied to like as taxes and licenses. That means extended warranties, documentation fees and dealer fees like manufacturer incentives – are possibly negotiable or even dismissed costs. Shop around and ask each dealership what extras they charge.
Let the dealer tell you what you'll pay monthly on a car. Otherwise if you let a figure out of the bag on what you can afford, you'll be steered to a vehicle whose car payments are equal to that. In fact, don't even talk about financing options or trade-ins until after the final price has been settled.
Sometimes leasing can save you money (especially in a recession). We constantly have been told leasing a car is a bad option. Leasing is based on the premises that makers guess what the resale value will be on a car in the future – which in today's economy is turning out to be less than originally thought, so you end up paying less. It’s a gamble, but consumers do come ahead when they don't have to pay for the depreciation on a leased vehicle.
If you're going to buy used, buy a 4-year old car and keep it for 4 years. Because cars depreciate, the car in question will have lost at least one-third of its value by the time you become interested in it and have little to no issues. Keep it for 4 years and perform proper maintenance and care – and sell it before you have to invest any money into major replacement repairs.
©2008 Katrina Ramser