People sometimes exaggerate the costs of buying, owning, and running a car. But let’s face it: it’s hardly a cheap enterprise! A lot of drivers seem to resign themselves to the fact that it’s going to be expensive. But large portions of these expenses are actually the result of mistakes. If you’re not careful enough about saving pennies from the off, you’re going about it the wrong way.
When you get a car, you could be setting several financial traps for yourself in the future. From the very beginning of the process, you need to be taking steps that will protect you from money troubles down the road. Here are some of the mistakes that people often make that end up putting them in financial distress later on.
Making bad loan decisions
Most people who purchase a car do so through financing options. This, of course, is essentially a loan. When people think about personal loans, they tend to think very carefully about the situation. They look at all their options and are vigilant about potential mistakes. But a lot of people forget to take such measures when they’re getting a loan for a car. They tend to see such loan deals as solid packages that are basically the same wherever you go.
But making mistakes in the loan acquisition process can spell financial disaster down the road. This is definitely one of the most important and sensitive areas of the entire process. Be careful not to make one of several common car loan mistakes. For example, making the wrong choice between a low interest rate loan and a cash rebate. You need to do your homework on both choices presented to you before deciding. One may look a lot cheaper at first, but this can change.
People with bad credit often make mistakes in this area. People who have bad credit often assume that their options are much more limited than they really are. Dealers know this. They can get you into an unsavory deal because you’re more likely to be desperate. You should check out other options such as ApproveNow before signing anything with a dealer.
High insurance rates
Car insurance is another area that people tend to believe is a lot more strict and fixed than it actually is. The thing you need to remember is that a lot of insurance agents are encouraged to sell you insurance at the most expensive cost possible. This is because they get a commission on the total sale price!
The Pennsylvania Insurance Department did a small investigation into this matter a few years back. Investigators posed as ordinary buyers and contacted 186 insurance agencies across three cities. They found that fewer than 30% of the agents contacted volunteered any information that could have saved the customer money on their insurance.
This is why you need to arm yourself with as much information as possible before you contact an agency. Cost and coverage information, as well as customer feedback, are all vital. It’s important that you remember that high insurance rates aren’t always the result of bad driving. Quite often, it was simply a case of the buyer being taken advantage of by the insurance companies. Be careful when shopping for premiums yourself!
Lack of maintenance
So we all know that the costs of car ownership leave a lot to be desired. A lot of people could see themselves getting a car, even with the high upfront costs. They tend to worry more about the costs that come afterward.
An alarming number of people don’t do any sort of maintenance work on their car. And this is a big mistake – and, if you’re a driver, then you’ve probably already heard about this sort of thing. People really do underestimate the importance of keeping their car checked and tuned on a regular basis. Many are put off simply because it costs time and money to keep a car maintained regularly. We can certainly sympathize with that. But you could be putting yourself at severe financial risk in the long run. The most common car problems are often the result of lacking in this area.
The fact is that the majority of car breakdowns occur as a result of a problem that could easily have been prevented with proper maintenance. Something goes wrong with the engine because of an oil problem – well, regular oil checkups could have prevented that. A tire goes flat or blows out completely – well, regular tire checks and inflations could have stopped that. Brake failures can definitely be spotted far in advance if maintenance is done properly. Know how to do regular and thorough maintenance of your car, before exorbitant costs come back to bite you later on.
Those pesky costs of ownership are also contributed to by costs of operation. And the costs of operation can always be reduced, regardless of what you think. A surprising number of car owners seem to resign themselves to the idea that driving a car will always be frighteningly expensive on a monthly basis. But if you’re willing to do the research and make a few changes, you can avoid a lot of cost problems going forward.
The goal, ultimately, is to make your driving much more efficient. And much of this has to do with your fuel usage. Everything from the car you decide to buy to the amount by which you decide to fill up your tank will affect fuel costs in a big way. What you need to focus on is the fuel economy of your car.
Of course, not everyone who aims to improve their fuel economy succeeds. This is because they can often make decisions that seem to save them money, but can, in fact, have the opposite effect. An extremely common mistake that people make is driving a bit farther to go to a gas station that sells cheaper fuel. It may seem smart, at first. And there’s a sacrifice of time made there, too, which helps convince people they’re doing something good. But they may actually be using enough fuel to offset or even exceed the potential saving. Thankfully, there’s actually a calculator you can use for this precise situation!