How to Save Money on Your Car

When times are hard economically, people look for ways to save money and cut back on spending. If you are one of those who are experiencing a tightening of the budget, you're sure to be looking for ways you can save now. Although several things in your life can be cut back on, your car can be one of the biggest. Here are five money saving tips when it comes to buying and maintaining a vehicle that will be easy on your budget and smart for your future.

Tip #1: Buy Economically

When you purchase a car, there are ways to save money both in the long run and in the short term. First, find a lender with the lowest interest rate that you can qualify for, or if you can, pay cash for your vehicle purchase. Interest rates are determined by your credit and the year, make, and model of the car you intend to purchase. If your credit is poor, your best option to save money is to pay cash or put a large payment down to offset the interest you will be paying over the life of your loan.

Second, when looking for a vehicle, don't buy new. A new vehicle costs more to begin with and can be more expensive to insure than a used vehicle. A new car also looses value immediately when you start to drive it, so building equity in a new vehicle doesn't happen right away and you may loose money on it in the long run as the value of vehicles drops every year. On the other hand, you don't want to buy your car well used or an older vehicle, as those cars tend to need more maintenance and upkeep to keep them running, especially if they weren't well cared for by their previous owners. Choose the middle ground and go with a car that is one to three years old with as few miles as possible. This type of vehicle should be easier to maintain, not very expensive to insure, and still under warranty, so it saves money if something does go wrong with it. If you are set on purchasing a new car, lease to own instead. In a lease to own option, you pay your lease month to month, then when you are ready to purchase, most dealerships will allow you to do so at a used price and you get to drive a new car.

Third, buy an economically friendly car. The better gas mileage your car gets, the less you will be spending at the pump in the long run. If you purchase a hybrid, electric, or flex fuel vehicle, you will be saving money on gas week to week, and you can claim a large energy tax credit of up to $3,400 the year of the purchase. That is a huge savings. Economically friendly cars are also less expensive to insure. The safer the reputation of your car and the more eco-friendly it is, the better your insurance rate.

Tip #2: Pay it off

When you purchase your car, try to pay it off as soon as possible. If you can pay with cash, that is best, but since most people can't afford to plop down $16-$25,000 at the time of purchase, loans are a fair option. When you enter into your loan, be sure that there is no early pay off penalty. Whenever you earn extra cash, you get a large tax refund, or you are gifted money, be sure to put some if not all of it toward paying off your car. The sooner you can build equity in your car, the sooner you can start saving money. If you build enough equity in your vehicle early on, you can sell it for a profit, especially if you plan on purchasing another car, and when you own your car outright, you are saving yourself the money that would normally go to a car payment every month. That's at least a couple hundred dollars a month in savings if not more.

The other reason for paying your car off as soon as possible is the sooner you pay it off, the less interest you have to pay. With the added interest most people pay on their vehicle loans, they could be paying anywhere from $5,000 to $10,000 more in interest than the original amount of the loan. You can save at least part of that big chunk of change by paying off your car early.

Tip #3: Service Your Vehicle Regularly

If you service your vehicle regularly, you can almost guarantee yourself less costs over the life of the vehicle towards breaking down or replacement parts. Engines can last longer than the rest of your car if they are treated right and maintained properly. The year, make, and model of your vehicle determine how often you should perform maintenance. Every vehicle manufacturer has different recommendations for maintenance schedules and oil changes for the vehicles they make. For instance, Acura recommends you service their vehicles and have an oil change every 7,500 miles, whereas Toyota recommends an oil change every 5,000 miles for most of their vehicles.

You can find the recommendations for your car in your owner's manual. If you don't have an owner's manual, a good rule of thumb is if your car is a 2000 or newer, change your oil every 5,000 miles, but if your car is older, cut that down to 3,000 miles. If you are still unsure as to when to have your oil changed, a good investment for the future would be to have an oil analysis test done. These are relatively inexpensive and can help you determine the optimum mileage to change your oil and schedule maintenance for your vehicle. Be sure to have an analysis done regularly, every five years for example, so you can be sure that your optimum mileage for service doesn't change.

A regularly serviced vehicle can save you a lot of money. For one, you won't have to replace it nearly as soon as if you don't maintain your car well. For another, a well maintained vehicle performs well. You won't be forking out money for repairs often, and you will know if your car isn't behaving properly and catch problems while they are small before they become monster money issues.

Tip #4: Clean Driving Record

Every car owner in the United States is required to purchase insurance for their vehicle. Insurance costs can be a lot of a little depending on you and your driving record, and the vehicle which you are wanting to insure. A clean driving record guarantees you a better insurance rate. A better insurance rate means savings, both monthly and yearly. For every driving citation, accident, or arrest involving a vehicle, like a DUI, your insurance rates go up. Save yourself some money and clean up your driving record if it needs it, and practice safe driving habits.

Most insurance companies not only give you discounts for being a safe driver, but they will also lower your rate every year you keep your driving record clean. If your insurance company hasn't lowered your rate and you have kept a safe driving record, call them and see if they'll negotiate a lower rate with you. If they won't, there are plenty of insurance companies out there who will. Find the best rate possible for your driving record and your vehicle. Remember, you don't have to stick with the insurance you have if it isn't the best for you. Saving money could mean switching to an insurance company that is friendlier toward your wallet.

Tip #5: Take Public Transportation Whenever Possible

Although it may not be the most glamorous option, taking public transportation can be a huge money saving technique. It saves you on gas, wear and tare on your car and it is better for the environment too.

You don't have to throw huge amounts of money into your gas tank every week, month, or year. Public transportation normally costs anywhere from $1-$3 for a day pass. Times that by the number of days you are using it and you'll most likely still end up paying less than you do for gas. You can also get passes that give you a discount on the daily pass, like a year pass, where you can ride public transportation all you want all year long. You were already saving money using a day pass, now with the discount off that, you could save even more. Most large companies will also give you an allowance every month for car-pooling or taking public transportation to work. If you work at one of those companies, not only are you saving money on gas, you are getting paid for it too. Ask your Human Resources Department if they offer an allowance for car-pooling or public transportation users.

Taking public transportation means you are driving less, so less wear and tare on your personal vehicle. This means less maintenance costs to you, and you don't have to change your oil nearly as often. It also means, you are less likely to cause an accident, since you aren't driving, and therefore, you won't need to pay for repairs. Public transportation saves you money on your car all around.