Ways to find an affordable car

Buying a car is an exciting venture, whether you’re a first-time buyer or a seasoned pro. It’s thrilling to think of all the places you’ll go, and many people also find satisfaction in making a deal. Buying a car is generally considered a major purchase, but it doesn’t have to break the bank either. Finding an affordable car takes a little legwork but may be well worth it if you know where to look.

What is an affordable car?

Your definition of affordability may vary drastically compared to someone else’s. Your own definition will likely change as you move through life. Still, when considering affordability, there are a few universal questions to ask yourself:

Costs of ownership

Buying a car is one thing, but owning a car comes with a different set of responsibilities. There are several ongoing costs of ownership that determine how affordable a car may be in the long run:

• Maintenance and repair: Keeping your car on the road can potentially come with additional costs over the years.
• Fuel: Cars that get low gas mileage will probably cost more over time.
• Loans and interest: If you got financing to buy your car, you'll probably have monthly loan payments for the foreseeable future, and the interest you pay is an added expense.
• Insurance: Speaking of recurring costs, let’s talk insurance. It's another monthly expense, and some cars can be a lot more expensive to insure than others.
• Other costs of ownership: In addition to the above, there are also many other costs of ownership including annual inspections, registration fees, and getting new license plates. Don’t forget about oil changes, occasional breakdowns, and the cost and availability of parts. Even those scented plug-ins you love to get every month can add up in time. These mundane costs are often overlooked but affect the overall affordability of a car.

Buying a car on a budget

Now that you’ve got an idea of a few factors to consider when determining what you can afford, it’s time to get into the nitty-gritty of buying a car on a budget. Here are a few helpful tips:

Explore your payment options

Generally speaking, most folks buy a car in one of two ways — either financing or cash. With financing, you’ll take out an auto loan that you’ll need to repay over time, with interest. In the latter scenario, you’ll need to save up enough cash to cover the full purchase price of the vehicle, including any associated fees.

The biggest advantage to financing is how quick and efficient it can potentially be. You won’t have to worry about pinching pennies for months or years to save up the kind of cash needed to buy a car. Instead, you’ll apply for a loan and then gradually pay it back (usually monthly), plus interest.

The biggest advantage of paying in cash is saving money. By not having to make monthly interest payments on a loan, you’ll likely end up paying less for your car in the end. Knowing exactly how much you have to spend is also a way to help discourage accidental overspending.

Explore different sellers

Most people are familiar with buying a car, either through private sales or a dealership. When you think of buying a car, these are probably the first things that come to mind. There are, however, a few lesser-known options where it’s still possible to buy a car on a budget:

• Direct from factory: Buying directly from the manufacturers has started to gradually gain popularity. You get to customize your vehicle, your way, on your time.
• Car brokers: Brokers are the middleman between buyers and sellers. They're expert car buyers who understand all the ins and outs that might intimidate inexperienced customers. A reliable broker could save you money by securing a better deal, as well as saving you valuable time and effort. When working with a broker, it’s considered best practice to perform your own due diligence before committing to their services. Though many do good work, some may not be acting in your best interest.
• Auctions: There are several different types of auctions, but all of them represent the potential to scoop up a car at a reasonable price. Before you get too excited, it’s important to remember that refunds or returns probably won’t be allowed. As such, auctions are very much a “buyer beware” situation where knowledge and experience are your best friends.
  

With that understanding, there are several types of public auctions you might consider. Impound auctions are for cars confiscated by the police that can’t be returned to their owners. Similarly, government auctions feature government-owned vehicles that are being sold to clear inventory. This includes cars from law enforcement as well as civil servants. Government cars are often sold at significant discounts. Be aware, however, that most of these are sold “as is” and you’ll be responsible for any needed repairs.

Be realistic about your needs

If you’re looking to buy an affordable car, it also helps to be honest with yourself about what you need vs. what you want. An attractive little sports car may not be ideal for a big family, and a roomy SUV may be too much for a crowded city.

Ask yourself what you need to do with this car day-to-day. Considering an off-road warrior but you only hit the trails once a year? Perhaps renting for that outing would serve you better.

Don’t forget to factor in the costs of ownership mentioned above when reflecting on your needs. People sometimes fail to consider how much things like fuel economy, repairs and insurance can add up over time. If affordability is your main focus, those are all things to think about.

In summary

Finding an affordable car isn’t necessarily hard — it just might take a little extra work on your end. You may want to clearly establish your budget, so you’ll be less tempted to overspend. Accounting for long-term costs of ownership and looking in places other people don’t may also help you get better results. As always, taking the time to become an educated consumer is an excellent first step in your journey.