We recommend these free tools and resources to help you with the car buying process.
If you are shopping for a used vehicle, Automoblog has a tool where you can see the inventory of the dealers in your area before you contact them. We have a similar search tool for new vehicles as well. Both will show you a price quote as well as any dealer discounts and manufacturer incentives.
In the long run, a down payment will save you money on financing a new car. We recommend putting at least 20 percent down, and 25 percent if you can swing it. Having money down lowers your monthly payment and lessens the amount you are financing.
Data from Cox Automotive shows the average payment on a new vehicle exceeded $530 in 2018 or about 10 percent of the median household income. In May 2019, Kelley Blue Book noted the average transaction price for a new vehicle was $37,185, up four percent from May 2018.
Talk about sticker shock!
Sometimes, the higher MSRP is offset by longer long terms, like 72 or 84 months. However, we don’t recommend going any longer than 60 months if you can help it. While longer loans lower the monthly payment, at the rate vehicles depreciate, it’s better to save up for a down payment and take a shorter loan of 48 months. This allows you to pay the car off more quickly instead of sticking with something for six or seven years.
Tip #3: Never Assume Leasing is Better
Leasing has plenty of benefits, including a lower monthly payment and always being under full factory warranty. If you want a higher trim level, leasing will often make it more affordable than financing. There is also a fun factor with leasing because you get to drive a new vehicle every two or three years!
However, miles can add up unexpectedly, and it doesn’t take much. A few business trips, summer vacations, and extended weekend getaways are all it takes before you hit your yearly threshold for miles. Lease payments are determined partly by the annual mileage allotment, and the lower the mileage allotment, the lower the payment.
The “sweet spot” for leasing is driving at or around 800 miles a month. Usually, the “10-5 lease” (to use the dealer lingo) will give you the lowest payment; that being 10,500 miles a year, which equals about 875 miles a month.
Tip #4: Walk Through The Service Department
If you are buying a vehicle from a traditional dealership, chances are you will bring it back for oil changes, tire rotations, and other maintenance work. At some point, ask the sales consultant to show you the service department. Ask them to introduce you to a service advisor and get their business card. This way, you have a person to call if you have questions about maintenance and need to schedule an appointment.