Planning To Buy a Car This Holiday Season? 5 Ways To Financially Prepare
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Gabrielle Olya
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Amen Oyiboke
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During the holiday season, many automakers offer sales and financing deals on cars to help push them off the lot as the new model year cars roll in. If you’re in the market for a new or used car, this time of year can be a great time to buy for added savings — but as this is a major financial decision, it’s something you should plan ahead for.
Here are a few ways to prepare for a holiday car purchase.
Figure Out How Much You Can Spend
The first step in buying a car this holiday is to create a budget for yourself.
“There are a variety of different expenses that come with getting a car — the purchase cost, insurance, maintenance and fuel being a few of them,” said Renée Horne, chief marketing and customer experience officer at Chase Auto. “Knowing how much you can afford, especially if you plan to pay for it over time, is key to avoiding a car bill that stretches your finances.”
Shop Around To Find the Best Deals
“Like many other items, vehicles have a price cycle; the end of the year tends to be when you can find a better deal, as dealers may need to meet quotas or clear out inventory,” Horne said.
However, this doesn’t guarantee that you’ll find the best deal you can get at the first dealership you walk into.
“Make sure you are considering multiple vehicles and shopping around at several dealerships to get the best price,” Horne said.
Gather Information About Ownership Costs
As Horne said, the purchase price is just one aspect of the cost of owning a car. Be sure to ask the dealership questions to find out how much you should be prepared to pay for the life of your ownership or lease to ensure the car will fit into your budget.
“Ask about the car’s warranty, and fuel and maintenance requirements,” Horne said.
You might also ask to bring the car to your own mechanic to get a second opinion on estimated costs, she added.
Determine If You Are Financing or Leasing
Knowing whether you will buy or lease a car can further help you estimate costs and financially prepare.
“There are benefits of both a lease and a loan,” Horne said. “With a loan, there is no mileage limit and you are free to customize and change the car as you see fit. After completing your finance payments, you own it.
“Leases typically have lower upfront costs than loan payments, and at the end of the term, you can return, purchase or trade the vehicle in,” she continued. “But keep in mind that most leases have a mileage limit, so it might not be the best option if you travel often.”
Do the EV Math
If you’re considering purchasing an electric vehicle, do the math to determine if this is the right choice for you.
“Cost, maintenance, range and charging logistics are all key factors to consider,” Horne said. “On average, it costs about half as much to fuel a vehicle with electricity compared to a similar vehicle that runs on gasoline. But just as gas prices vary, so do electricity costs based on your location, your driving style and the size of your battery.”
While EVs typically have a higher upfront cost, this doesn’t necessarily mean it will end up costing you more overall.
“There are options to help offset the cost, like federal and local tax incentives,” Horne noted.
“When it comes to maintenance, EVs typically require less maintenance than traditional cars,” she said. “EV batteries tend to be covered by eight- to 10-year warranties — outlasting the amount of time most people own their cars — but EV tires degrade faster due to the weight of the battery.”
Figure out how long you plan to hold onto your EV as well as typical charging costs in your area to determine if you can save money by switching to electric.
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