Comparing rates before refinancing your car loan is a key way to avoid leaving money on the table. Rate shopping can help you land a deal on auto loan refinancing that offers as much savings as possible, which can free up cash in your budget to spend on other…
You can potentially save thousands a year with nine practical ways to cut car expenses.
Second to paying for your primary residence, owning your car may be one of the biggest expenses you have. Vehicles provide a lot of conveniences, but the average person is spending around $10,000 per year on costs like their car loan, gas, maintenance, and car repairs.
While it may seem like you’re just stuck with these expenses and must pay them, there are a few intentional things you can do to save on car expenses. Doing this will help put more money back in your pocket to use on other expenses or for general savings. Below are some key ways to save on your car expenses.
Improve Your Credit Before Buying a Car
Your credit score is one of the most important aspects lenders factor in when you buy a new car and apply for a car loan. Usually, the best interest rates are reserved for borrowers with great credit scores over 750. If your credit is not established or you have a negative credit history, you could be stuck paying a higher rate.
Making sure your credit score is good before going to the dealership or buying a car privately can save you thousands. You can check your credit for free online and download your credit report from all three major bureaus using AnnualCreditReport.com. Check to make sure there are no errors or negative marks that you don’t know about. Then, consider paying down any existing debt and set reminders to make sure you pay your bills on time. Unfortunately, just missing one minimum credit card payment could lower your score.
Identify Your Biggest Car Expenses and Set a Budget
Do you have a budget for car expenses? Putting a budget in place can help you manage your costs and avoid overspending. A budget is just a spending plan and it’s a great way to prepare for expenses you’ll incur over the next few weeks or months.
Review your bank and credit card statement to see how much you spent on car expenses over the past month. You may even want to look back over the whole year to get a fuller picture. You can use free apps or sites like Mint.com to track and categorize your expenses for you. Some of your biggest ongoing car expenses might include things like:
- Your car payment
- Repairs and maintenance costs
On the surface, it may seem like you actually can’t set a budget for these expenses, but you can. If you don’t want to spend more than $300 per month on your car payment, you may need to consider a car that’s used and a few years old. You can also make a larger down payment or extend your repayment term to keep your car payment within your desired budget.
When it comes to gas, continue to track your fuel expenses each month so you can set a realistic budget. While you can’t control gas prices, you can control where you drive. You can consolidate errands or pick up things after work at stores that are on your way home to keep your fuel costs more reasonable.
For car maintenance and repairs, set aside an amount you feel comfortable with each month whether it’s $50, $100, or any amount. Even if you don’t spend money on maintenance costs that month, you can save your budgeted amount so it will accumulate and be available to you when you do have car maintenance or repairs that add up to a lot of money in the long run.
Consider Cars With High Gas Mileage
The make, model, and color of your next car can all be important things to think about. However, the car’s gas mileage is important too. If you’re looking to save on car expenses, one of the easiest ways to do this is to choose a vehicle that has great gas mileage for your next car purchase.
Now, this may not always be possible especially if you have kids to drive around and need a bigger vehicle like an SUV or minivan. Yet, it’s still worth a try. If you’re able to fill up your tank with $40 instead of $60 to $70, this will add up over the months and years that you drive your car.
Whether you’re getting a used car or a new car, researching the fuel efficiency could be helpful. Just look up the car you’re considering buying and you should be able to see the gas mileage or MPG in the details section. Some vehicles might get 30 miles per gallon while others might get 25 or 40.
You may see a number like this ‘21 city / 29 highway’ which means how many miles the car might get on a city street with several stops vs. a highway with a more open stretch of road and fewer stops.
Shop Around and Compare Auto Insurance Quotes
Try shopping around to compare auto insurance quotes every six to 12 months, if you have a good driving record. Insurance companies are changing their rates all the time and you want to make sure you’re getting the best price. Instead of being loyal to a particular insurance company no matter what, compare the features and coverage options that you truly want to find the best option for you.
For example, if you want full coverage, see how much your insurance company would pay if someone hit your car. Would you get a rental car to use while your car gets fixed? How much will they cover for potential injuries and what would your deductible be? Would you be interested in roadside assistance?
It may make sense to switch companies after a while if you can get a lower quote. To avoid looking up companies one by one, use a car insurance comparison site like The Zebra to shop for quotes all in one place.
Another option to try is bundling your car insurance with other types of insurance to save money on your insurance premiums. Your insurance company may offer you a discount to bundle your homeowner’s renter’s insurance with your auto insurance.
Lower Your Car Payment by Refinancing
Just like with your home, you can refinance your car to lower your monthly payment or save on interest. Auto refinancing is easy and the process is very similar to when you first got your car loan. Of course, you may or may not be approved to refinance depending on factors like your credit, debt-to-income ratio, employment status, and income just to name a few. However, it’s still worth a try to shop around for quotes and see if you can apply if your credit score is good.
You can refinance your auto loan with an older car or a newer vehicle. Shop around with RateGenius and choose the lender with the best terms. Then complete your application and start saving with your newly refinanced auto loan. The average RateGenius customer reports saving $83 per month which adds up to nearly $1,000 per year put back into your pocket.
Get Regular Tune-ups
If you want to avoid breakdowns and keep your car running smoothly, try getting regular tune-ups with your mechanic. A tune-up is basically a check-up for your car where the mechanic can make sure all your systems are working well. Tune-up maintenance generally includes things like your fuel to air mixture by checking your air filter, spark plug wires, engine, tire, and more.
Doing this can help the mechanic catch issues before they get worse and more expensive. According to Kelley Blue Book, a tune-up might cost anywhere from $40 to $150. This could still save you money if it exposes and helps prevent more expensive repairs in the future.
Sign Up for Loyalty Rewards
If you frequent a particular auto shop, you can save on car costs by signing up for rewards. Some places will reward customers who get a service done or come back. You may be able to sign up for coupons and text message alerts for deals. Or, the company may send you offers in the mail for discounts on services or a free oil change.
Be sure to utilize any freebies and warranties you get when service work is done on your car. For example, if you have to get new tires, see if you can utilize a special to save. Put the date of the special offer in your calendar to go back then. A common freebie companies offer when they install new tires is a free tire rotation at a later date.
Renew Your Registration on Time
Each state has a different fee, but you’ll need to renew your car’s registration annually in most cases. Don’t delay doing this because you could get charged a late fee as well.
Make a note in your calendar to renew your car’s registration the month before. So if it expires in April, you’ll want to go to the DMV and renew it in March. If you live in a state where the fee is pretty high, you can set aside a little amount of money each month to save up for the registration fee throughout the year.
Carpool and Use a Gas Savings App
One option for saving on fuel costs that might work is carpooling. If you have a coworker that lives nearby and you both work the same shift, see if you can drive to work together and split the gas. Or, maybe you ask your neighbor if they’d like to trade off with you when it comes to picking up the kids for school. There are so many opportunities to carpool and stretch your gas budget.
If carpooling is not an option for you, try a gas savings app like Upside. Upside is free to use and works like a cash back app to help you earn $0.25 per gallon every time you get gas at participating gas stations. This might not sound like a lot, but during the month it can add up to a decent amount of savings.
If You Look for Savings on Your Car Expenses, You’ll Find It
Now that you have nine solid ways to save on car expenses, it’s time to start testing them out. Calculate how much you’re spending on car expenses monthly or yearly and set a goal for how much you’d want to pay.
The great news is that if you look for savings on your car expenses whether it be comparing auto insurance rates, refinancing, or signing up for loyalty rewards, you will find real ways to save and put money back into your pocket.