How to shop for a car on a budget

On the Road 3 min read

When it is time to purchase a car you have two traditional payment options: paying for the car with cash or financing the vehicle. Either way, you have to consider your budget when shopping for a car. It is important to find deals and begin saving money so that you get the best value for your hard-earned cash. If you plan to finance the vehicle, here are a few items to consider before you begin your search.

Begin with the end in mind

First, think about the monthly car payment that you can easily fit into your budget. The monthly payment should not be a stretch or difficult to maintain. Then, use a calculator like this one to back into the maximum car price that you can afford.

Once you have an estimate of how much car you can afford, it is time to do a little bit more research as to how much to expect for a total monthly car expense. Owning a vehicle is more expensive than just the monthly car payment. You have to consider maintenance, repairs, fuel costs, and general upkeep.

Keep these costs in mind when you are looking for a car. For example, some vehicles will have lower insurance rates. For this reason, you may decide not to get a sports car. Even though you might really wanted one, insuring a sports car is typically more expensive than insuring a sedan. Also, you should think about the potential repair costs. Replacing a car part on a foreign car is typically more expensive than replacing parts for a domestic car. Some vehicles recommend top grade fuel only. A car like this would cost more than one that would allow you to fuel with lower grade gasoline.

Save for the down payment

The next step is to save for the down payment. Saving about 20% of the total car price for the down payment is a good rule of thumb. However, according to recent research, the average car down payment amount is about 11% to 12%. You can allocate the remaining savings towards additional payments. Or, you can continue to save until you can pay for the vehicle with cash.

And finally, if you need a car and you don’t want to finance a vehicle, then why not try purchasing one from family or friends? If you have a friend who is looking to get a new car, offer to buy their older vehicle from them. You might be able to give them a better deal.

How to find deals

Now that you have an idea of the type of car you want, how much you want to spend and whether you are paying in full or financing, you can begin searching for the best deals. There are three places to find the best deals: online, the local papers, and the local dealer.


In order to find deals online, you must be very specific with your search. Let’s say that you are looking for a blue 4-door sedan. Instead of searching sedan alone, search for blue 4-door sedan. Then browse through the deals that you find and make a note of the highest price that you see and the lowest price. Compare the differences in amenities as well. For example, a more expensive 4-door sedan might have leather seats while a less expensive one has cloth seats. From your search you will also begin to understand what amenities are most important to you.

In the local paper

Believe it or not, there are still car deals in the local paper. Locally, you could find a deal that you would not be able to find online. This is particularly true if you find a car for sale from a smaller dealer. You have the option to inspect and view the car in person, which is very important if the vehicle is used.

At the local dealer

Your local dealership should have occasional sales and promotions for new and used cars. Often, they run radio and television ads. If you pay attention, you could find the exact car that you want. Patience and negotiation is the key to shopping at a dealership. You may be able to negotiate dealer incentives or even get the total price of the vehicle dropped.

Shopping for a car on a budget can be a simple process if you begin with the end in mind and create a budget that fits your personal situation.

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