Owning and operating a vehicle is an expensive undertaking. The purchase price of the vehicle is only the beginning. When this is added to the cost of maintenance and fuel expenses, this could stand out as one of the biggest personal expenses in your budget.
As with all types of personal finance tasks, the more cost-saving measures you resolve to adopt today, the more money you will save in the future. Although the savings can depend largely on your personal situation, the following ways guarantee significant cuts in costs:
How To Save Money When You Buy A New Car
Before you buy a new vehicle, you should be well-prepared so as to avoid some of the following mistakes:
- Car finance - If you are financing the purchase of the car, you will find that the friendly car salesman at the dealership is very accomodating. More often than not, dealers can ensure that almost all vehicles fit into your budget. They adjust the interest rates, offer longer loan tenures, or restructure the car loan in such a way that you are able to make monthly payments in a comfortable manner. But you should be aware of the fact that even a few extra months in repaying the loan can add thousands to the total cost of the vehicle. So, choosing an affordable car is a crucial step. If you are financing the vehicle 100%, remember that you will be paying a lot more as interest over the long term.
- New versus used cars - With the availability of attractive used cars in the market, you can consider buying a second-hand vehicle to bring down your car purchase cost. New cars undergo a significant amount of depreciation in value over the first 2 years; so buying a one or two year old vehicle actually makes sense.
- Maintenance costs - When buying a car, it is important to consider its long-term maintenance costs that are often overlooked. If you have an expensive vehicle, the cost of insuring it also increases.
- Car trading - Trading cars every few years is not a great move. You would know that cars depreciate quickly, so when you change vehicles frequently, you lose on trade-in values. It is advisable to buy models that are smaller with higher mileage.
How To Save On Car Maintenance Costs
After you purchase the vehicle, you will have to bear the monthly EMI, auto insurance premiums, and cost of fuel. There are several money-saving opportunities as far as car maintenance is concerned:
- Keep your vehicle tuned properly, as this will improve its mileage.
- Replace the oil and oil filter after the car has run for a specific distance. Changing the oil frequently will extend the life of the engine, reducing engine wear and saving on repair work.
- Examine the air filter of your vehicle on a monthly basis. A clean filter improves the mileage of the car.
- Using the right tyres for the car can also improve its mileage by up to 10% each year.
- It is not necessary to use high octane gas in your vehicle unless it is pinging and knocking. Premium gasoline costs higher than ordinary fuel, but it is most suitable for cars with high-performance engines or when the manufacturer recommends high-octane fuel for the vehicle.
- It is advisable to check the tyre pressure regularly, as you can lose out on mileage for under-inflation. You should also get your tyres balanced every year in order to avoid wearing out the suspension system and shock absorbers.
- It is important to check your car’s fluid levels often. If the battery has low water levels, its life will be shortened. Similarly, check the automatic transmission fluid, coolant, and brake/clutch fluids regularly.
How To Save On Driving Expenses
You know that it is impossible to negotiate on fuel prices the way you negotiate the cost of the car. However, you can take several steps to reduce the overall expenses on driving:
- Check if it is possible to carpool to work. This saves you a lot of money in the long run, and it is also an environment-friendly initiative. Not only will you save on gasoline, you will also save considerably on wear and tear of the vehicle and its maintenance costs.
- Carpooling has an added advantage of reducing the annual mileage on the vehicle. Since you are using the vehicle less, you may also strike a better deal on your car insurance premium. Just make sure that your insurance company is aware of the average distance you drive so that you can benefit from this.
- Develop habits that save on fuel. This includes accelerating gently, watching the traffic conditions in front of you so that you can slow down gradually instead of stopping, avoiding driving too fast or too slow, and maintaining a steady speed when driving on the highways. You should also try not to get stuck behind slow-moving vehicles too often. When this happens, you will slow your pace of movement and then speed up to pass, burning more fuel than usual.
- Do not let your vehicle idle in traffic, as idling wastes a lot of fuel.
- You can save on fuel substantially by combining multiple errands into one trip.
How To Save On Motor Insurance
Car insurance is a significant expense associated with car ownership. The cost of your insurance policy will be higher if you have a poor driving history or if you live in specific high-risk areas. Listed below are some ways in which you can save on car insurance premiums:
|Voluntary deductible||Opting for a high voluntary deductible ensures a low premium. However, you should not choose very high voluntary excess values, as you will be required to pay this amount when you raise a claim. If you are a very confident driver with a blemish-free driving history, you can consider raising your voluntary deductible value to save on car insurance costs.|
|Safety features||If your vehicle has authorised anti-theft devices installed in it, you can qualify for big discounts on car insurance premium.|
|Insurance for older cars||If you have a very old vehicle, say one that is 10 years old, you can consider dropping own-damage cover for it. You should, however, retain the third-party liability insurance cover as it is mandated by the law. For cars that are older than 5 years, buying a comprehensive car insurance policy may not be a worthwhile investment owing to depreciation.|
|Compare insurance between providers||Several financial websites that are neutral offer the facility of comparing insurance policies between providers. This is a very useful service as it helps you in determining the most cost-effective product for your needs. You can also compare policies at the time of insurance renewal and make a judicious purchase.|
|Bundling insurance||If you have a health or home insurance policy from an insurance company, you can consider purchasing car insurance from the same provider. This way, you may be eligible for discounts based on loyalty. Speak to the insurer and understand whether you are eligible for such discounts.|
|Preserve your No Claim Bonus (NCB)||Insurance companies offer NCB for drivers who do not raise any claim in a policy year. This is a very attractive benefit in car insurance as it helps in bringing down your renewal premium by a significant amount. So, preserve your NCB by not raising frequent claims and claims for small expenses.|
|Practise defensive driving||If you are careful on the roads, the chances of you getting involved in an accident are lower. This can save you a lot of money. So practising defensive driving is a great way to cut down your car maintenance/driving costs.|
|Discounts based on profession and age||Car insurance companies offer premium discounts to customers based on their profession. Doctors and military personnel benefit from lower premiums this way. If you are between 25 and 60 years of age, you are likely to receive car insurance at lower costs as well.|
|Automobile association membership discounts||Car owners who have membership in certain automobile associations get cheaper insurance rates. In case you have membership in such an association, do not forget to mention this at the time of car insurance purchase.|
In conclusion, there are several ways in which you can bring down your car ownership costs. You will have to be diligent and consistently adhere to the cost-saving methods chosen by you in order to see significant gains.
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