5 Car Buying Tips Every Clever Girl Should Know

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When it comes to buying a car, it's important to be smart about it because while cars are deemed an asset, they are a depreciating asset. This means every year they decline in value due to wear and tear and also due to the yearly release of newer models. As a result, cars are not an investment since they only hold value for a short amount of time and not over the long term.

"While cars are deemed an asset, they are a depreciating asset and as a result, not an investment."

Yes, you might be able to sell your car for a large amount of money in the event of an emergency or a downgrade, but keep in mind that with each passing year, the value of your car gets lower and lower. Here are a few tips to help you save money if you are in the market to purchase a car!

Tip #1: Consider buying fairly used

A new car can lose anywhere from 10 to 20% of its value as soon as you drive it off the sales lot. That means that if you buy a new car and bring it back a few hours or days later to return it, it will be worth much less than you originally paid.

The reason why is because the wholesale value on a car (the price the dealer pays to get the car) is usually much lower than the retail price on the car (the price you pay the dealer). When you buy a new car the gap or difference between wholesale and retail can be quite substantial. Buying a used car (older model) on the other hand means that you can get the benefit of the retail price being much closer to the wholesale price because the car has miles on it and is an older model which automatically allows it to cost less.

Many people think buying a used car means buying an old beater but buying a car that's 1 to 3 years old can save you a large amount of money and many used cars are pretty much almost new!

Tip #2: Know what you are willing to pay in advance

It's important to do a comparison to determine what the average cost of the car you are willing to buy is and there are a ton of online tools that can help you make this determination. For instance, Kelley Blue Book and TrueCar.com are great places to start. These sites list both the manufacturer's retail price and the suggested retail price or fair purchase price. Once you have an idea of what your car should really cost you, you won't be easily moved by the "supposed" discounts the car salesman is selling you.

Tip #3: If you choose to finance your car, know your credit score before you go

Your credit score will not only determine what interest rate you get if you choose to finance your car but it can also help you with negotiating down the cost of the car and those two things combined can save your hundreds or even thousands of dollars.

One important thing to keep in mind when financing a car is that you will be taking on new debt and so it's important that you buy what you can realistically pay off and make a plan to pay off the debt as quickly as possible. The last thing you want is to still end up paying a bunch of interest after taking so much time out to negotiate a better price - that's counter-productive.

Tip #4: Secure your financing outside of the dealership

Another important thing to keep in mind that you can secure your own financing, possibly at a much lower rate, in advance of visiting a car dealership. Spend some time shopping around for the best interest rates on sites like BankRate.com and stop by your local bank or credit union to see what they have to offer. Even a half percentage difference on an interest rate can be a lot of money.

Tip #5: Factor the cost of owning a car into your budget

It's one thing to be able to purchase a car and a completely different thing to be able to afford to keep it. Keeping it includes purchasing gas, paying for insurance and being able to pay the maintenance costs for your car. It's a good idea to figure out how much all these things will cost you and build them into your monthly budget. You should also plan to build up additional savings to support any car repairs or maintenance needs that might come up e.g. oil changes, new tires etc.

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