Want to buy a new car but strapped for cash? Many people underestimate what they can buy with their money – whilst luxury SUVs and supercars may be off the menu, you don’t have to settle for a barely-working old banger (that will most likely cost you a fortune in the long run). Here are just a few tips for buying a car on the cheap.

Don’t buy brand new

This is fairly obvious but worth noting – there isn’t a family car out there that you can buy brand new for less than six grand. The cheapest new cars on the market are the Dacia Sandero and Nissan Versa S and these come at the price of no frills (including no air con and in some cases even no radio). Even used cars at fifth of the price still have these luxuries.

A brand new car loses 40% of it’s value on average after one year of ownership alone. After three years, it’s likely to have lost 60% of it’s value. Buying almost-new could allow you to buy something that isn’t cursed with problems but isn’t extremely expensive either. Most cars stop depreciating after about eight years, after which they’re generally dirt cheap but much more prone to faults.

When buying used cars, you’re usually better off buying from an independent seller than a dealer. This is because dealerships have to make more profit to cover business running costs. That said, dealerships offer more protection making it easier to get a refund if there’s a fault.

Take out a car loan

Borrowing money can allow you to extend your budget and get something nicer – but be wary of high interest rates! Many people can get into debt by taking out car loans that have heaps of interest attached. That said, if you’re a careful budgeter, there’s no reason to not consider a car loan. There are car loans out there for everyone including bad credit car loans for those with a debt history. You may also want to consider alternative ways of borrowing such as peer-to-peer lending and lines of credit.

Opt for a lease

Car leases are the automobile equivalent of renting a home. For a small monthly rate, you can afford to have a car that you wouldn’t be able to buy. The problem with leasing is that you don’t actually own the car and so may be restricted to mileage as well as not being able to make modifications to the car. You’re also likely to pay more in the long run than had you bought the car outright. Many leasing companies offer you the opportunity to buy the car once your contract runs out, which can be a perk. Shop around leasing companies to find the best rates.

Use a credit card

Buying a car entirely on credit card isn’t advised unless it’s fairly cheap – you’re much better off borrowing by taking out a loan. That said, it’s worth paying some of the purchase cost using a credit card if you can. Credit cards offer protection so that if you buy a car only to find that it’s faulty, your credit company will refund you.  

Exchange your existing car

If you have a car currently that’s not in bad condition, you may be able to exchange it for another vehicle. Due to depreciation this could result in you only being able to afford something very basic. However, you could always part exchange your car. This could allow you to pay a little extra for something a little snazzier.

If your car is damaged and you doubt you’ll get anything for it, you could always sell it for parts. You may only get a small amount of money for scrapping your car, but it could still be something to contribute to the cost of a new car.

Negotiate with the seller

Learning to negotiate is key when buying a car on the cheap. Dealerships will drive a harder bargain – these are professionals who are experienced in the art of bartering and it could be very difficult to haggle them down. That said, there are a few tricks you can try such as offering a price match – if another dealing if offering a cheaper deal on a similar car, you could ask that they match or beat the price. You can also use the trick of walking away and letting them offer a better deal, however this may not work if other buyers are interested in the same car.

When buying from an independent seller, there may be more room for negotiation. Certain sellers in remote locations may be more eager to get a vehicle off their hands. Independent sellers also won’t try to upsell extras like roof racks and floor mats, which can be an irritating downside of dealerships.

Factor in maintenance and insurance

Many buyers set their sights solely on the sale price when trying to hunt for a bargain. However, many cheap used cars are usually priced so low due to being cursed with maintenance problems. It’s always worth asking about past problems as well as researching the model’s reliability. Otherwise you could be paying multiple thousands in repairs.

Fuel economy is also important to consider nowadays. A fuel efficient car will result in less trips to the pump and cheaper road tax. Electric and hybrid cars are generally more expensive to buy, but their perks can be worth their high price, especially if you live in some cities in which there may be free parking zones and free charging stations for electric vehicles.

Finally, you need to factor in insurance rates. Old used cars – particularly those that have gone over their mileage – can be very expensive to insure. Certain cars may have also developed a reputation for being unsafe, or may have a high accident rate, which could also result in sky-high insurance rates. Before buying a vehicle, always look up on online how much it may cost to insure to get a rough idea of how much you’ll be spending.

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Emily Muelford

Emily is a British writer whose love of car culture is augmented by a fascination with both the European and American automotive markets. Her perspective is uniquely fish and chips.

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