Am I Paying Too Much For My Car?

Though most consumers do not realize it, they are probably paying too much for their vehicles. People go to dealerships with their price quotes gathered from so-called reliable online and print sources to negotiate a payment plan. However, even if the agreed upon amount seems fair at the moment, when calculated over the long-term, it is usually over their budget.

Furthermore, always remember that a car depreciates in value from the minute it is taken off the lot. That means you can expect no significant return on your investment, in most cases. If you have ever attempted to trade-in a used car, you probably know what we mean here.

All you can hope for in reality is try to reduce your overall losses by spending a reasonable percentage of income each month. That is what we are to here to help you do.

car cost

Following are the top four ways to save on your vehicle costs.

Follow the 20-4-10 Rule

To spend a fair amount on your car, use our simple 20-4-10 Rule. First, make a down payment of 20% or more when buying. Second, finance the car for four years or less. Last, spend only 10%.

Though the rule is straightforward, many have problems following it. You have to calculate your gross income honestly. Gather the paycheck stubs of all living in the household to determine just how much this number is. Gross income is the total amount before taxes and other deductions.

Also, take a look at your auto insurance payment receipts. Multiply your gross income times 0.10 to calculate 10 percent of your income. Then, subtract your insurance monthly payment from this number. If your car payment is above this figure, then you are paying too much and need to find a way to make a serious change.

Find Cheap Gas Online

Gas is another cost that can overextend a monthly household budget. A wise strategy is to download a software application to keep you updated on prices. These apps to help you save on gas provide the latest prices at stations across the nation. You can bypass a more costly station for one more gentle on your budget.

Lease a Vehicle Rather Than Own

Many savvy drivers have taken to leasing vehicles rather than outright owning them. These people believe that the burden of ownership proves too much.

If opting to lease, be sure to negotiate a monthly payment amount within the above 20-4-10 calculations for your household.

Save on Auto Insurance

Different types of auto insurance will add significantly to the monthly household transportation costs. At times, we can do little to reduce insurance premiums, it seems. A lower payment from a budget insurer may mean inadequate coverage. With road accidents at all times highs in some municipalities, going without comprehensive coverage is rarely a smart move.

Nevertheless, there are other ways to save. First, check if your state has a license point reduction program. Quite often motorists who take a defensive driving education course can receive discounted insurance rates for a certain number of years. Also, if you have a teen driver in the house, keeping them on your own auto insurance plan may prove financially beneficial.

Stop Paying Too Much For Your Vehicle

We all need a decent automobile, but the payments can prove a drain. Use the above suggestions to get your transportation costs within budget and avoid paying too much. In these tough economic times it is wise to save as much as possible. Start now.