Buying a car during your retirement? Learn how to reduce the initial and long-term costs.

Few things compare to sliding behind the wheel of a brand-new ride, especially when you get a great deal on it. If you’re buying a car during retirement, understanding the total costs of car ownership and how to reduce them can help you get that feeling. With careful planning, research, and strategy, you can buy a car with confidence, knowing you’re getting a great deal that fits your budget.

How to Save on the Initial Deal

Between the down payment and car financing, the initial costs of buying a car can put a dent in your retirement savings. Having a plan in place before you get to the dealership will help you spot a good deal, give you negotiating power, and reduce the amount you’ll pay over time.

1 Research Car Options

Research cars to get an idea of what you want. Consider how the make and model will affect ongoing costs, such as insurance, fuel, maintenance, and repairs. For example, new cars cost more to insure because their value is higher, and luxury brands may have higher repair and maintenance costs if they need specialized service.

Strategy and planning could save you money on your new car’s sticker price and ongoing costs.

Another consideration is whether to buy a car that’s new or used. New cars will have warranties, modern features, and no wear, but they’re more expensive and may not have enough data to gauge their reliability. Used cars are more affordable and have more information on their reliability, but they often aren’t warrantied and may need repairs. Certified preowned cars strike a balance between the two. They’re reasonably priced, lightly used models that have been inspected by the dealer and are often warrantied, offering enhanced reliability.

Sites like Kelley Blue Book^® can help you find models based on features you want, as well as gauge a car’s fair market value so you can spot a good deal. The Edmunds True Cost to Own^® tool lets you estimate the ongoing costs associated with a vehicle, including factors like depreciation and insurance.

2 Secure Car Financing

Dealerships offer financing when you buy, but there can be drawbacks. You may not be approved for as much as you’d hoped, leading to disappointment if the car you want is now out of your budget. Dealerships also may not have the best offers, as they often make a profit on their financing.

Your financial institution will typically be able to offer you better terms and can preapprove you for a set amount, saving you money and guiding your budget. Preapproval prevents the disappointment of finding a car you love, only to realize afterward that it’s unattainable. It can also give you negotiating power, as dealerships may be more flexible on pricing if they know you’re in a good position to buy.

3 Put as Much Down as Possible

Putting at least 20% down when buying a new car – or 10% down on a used one – means you’ll pay less interest on your loan and have lower monthly payments. It also minimizes negative equity, which occurs when you owe more on the car than it’s worth, proving problematic if it gets totaled or you decide to sell. Considering that new cars depreciate by roughly 20% in the first year, saving up for a down payment is a smart move. If you can’t put that much down, then pay as much as you can without wrecking your budget.

4 Vet Cars You’re Interested In

When you find a car you love, vet it thoroughly, especially if it’s used. You should make sure the car is comfortable for you, noting seat comfort, driving position, visibility, and ease of access when getting in and out. Test drive it next, watching for warning signs like rough idling, slow braking, odd smells or sounds, pulling to one side, and slow acceleration. These signs indicate needed repairs, which could be expensive. If the car is used, have a mechanic inspect it, and check the CARFAX^® or AutoCheck^® report for previous accidents, which could result in lingering damage.

How to Save on Long-Term Costs

After the purchase, you’ll have ongoing expenses like maintenance, insurance, and fuel. Minimize these costs with strategy and proper car care.

1 Explore Insurance Discounts

Find insurers that specialize in covering seniors, as they may offer lower rates. Look into discounts, too, such as low-mileage, senior, or even bundling discounts, if you’ll have multiple vehicles. Completing a defensive driving course or allowing your insurer to monitor safe driving habits may also save you money.

2 Follow the Maintenance Schedule

Meticulously maintaining your car will help limit wear, extend its lifespan, and prevent extensive repairs. Your owner’s manual will include a schedule of recommended maintenance by mileage, such as oil changes, spark plug replacements, and transmission fluid flushing. Hang the maintenance schedule on your fridge to easily track what needs to be done.

3 Practice Safe Driving Habits

Safe driving habits (like maintaining proper following distance from other cars) not only help prevent costly accidents, but also reduce the wear on your car. For instance, driving too close to the car in front of you could cause you to slam on the brakes, which can damage your brake pads, calipers, and rotors.

Smart driving tactics can also help minimize damage. Hitting potholes, accelerating too quickly, or shifting gears while the car is moving will damage the suspension and transmission, leading to expensive repairs. Drive cautiously and defensively to protect your car (and yourself).

4 Keep It Clean

Keeping your car clean is about more than looks. Weekly cleaning removes dirt, grime, and contaminants (like road salt) that erode your car’s protective finish and paint, leaving it susceptible to scratches and rust. These damages can drop your car’s value, and rust can spread throughout metal components like the frame, jeopardizing safety and requiring repairs.

Finding the Auto Financing You Deserve

Like your retirement, buying a car should be as stress-free as possible. When you work with the right lender, you’ll feel confident that you’re making the best choice for you and your budget. Choose a financial institution that understands your needs and will provide financing that fits them.

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