Credit Union Members: Slash Auto Expenses and Save Money
In today's economy every credit union member is looking for ways to cut back on spending, save money, and make each dollar go a little bit further. One source for money-saving possibilities is your vehicle. If you own or lease a vehicle, you know it is one of your major expenses, from monthly payments to fuel and maintenance costs to insurance premiums and more. However, by taking a closer look at your auto-related spending and following some simple tips, you could uncover some hidden ways to spend less money on your ride and put more money in your share account.
5 Tips for Cutting Car Costs from Credit Unions Online
By Cyndi Cohen
- Keep your vehicle longer – this is a simple way to get more out of your car and save big on monthly expenses.
If your vehicle is in good condition and not causing you any costly problems, why not keep it around? You’ll save an estimated $5,700 per year according to Edmunds.com by cutting out a new car payment. Although many consumers get the new car itch after several years of having a vehicle, today’s cars and trucks will last much longer than that and have the extended warranties to back that up.
When it is time to start shopping for your next vehicle, consider opting for pre-owned. Since a new vehicle will suffer almost immediate and continued depreciation during the first year of ownership, a pre-owned car is a great value. Nowadays there is a huge pre-owned market - you can get a quality vehicle backed by a solid warranty and certification process, at an affordable price.
- Buy within your means – whether you’re shopping for your first vehicle, have been bitten by the new car bug or it’s just time to trade in ‘old reliable,’ there is one important rule…buy a car that your budget can handle.
Buying a vehicle that you can’t afford is dangerous since it can end up cutting into your savings and ultimately throw off the way you manage your finances by putting you in debt. According to Bankrate.com, experts recommend, on average, that a consumer not spend more than 20 percent of after-tax household income on all vehicles total. In this scenario, an adult with an annual take-home pay of $50,000 should spend no more than $10,000 per year for car related expenses including payments, insurance, gas and maintenance. Once you figure out average costs for fuel and maintenance based on national averages, you’ll find out that the amount you’re left with for your actual financing equates to about an $18,000 auto loan. So keep your budget in mind when shopping and be realistic about what you can afford. Of course, when buying find a credit union to get a low rate auto loan.
- Use a trusted mechanic – have a reliable mechanic waiting in the wings for major repairs and when choosing one remember the following:
- Use a mechanic that comes highly recommended from someone you trust.
- Find out how they handle their hourly rates. Is it a straight hourly rate which is the actual amount of time the job will take, or a book rate which is a predetermined amount set by mechanics for a particular job? You should know what you’re paying for the repair ahead of time.
- Get a quote on labor as well as parts, especially if there’s a chance you will be purchasing the parts on your own or doing the work yourself.
- Take a look around the garage to see how things are being kept and run. This can give you an idea of what kind of work they do.
When you can, do more minor maintenance on your own or with the help of a knowledgeable friend or family member. Some of the less complicated tasks include oil changes, checking fluids/tire pressure, and changing tires. You can also do the really simple things on your own such as washing, waxing, and vacuuming rather than paying a professional for these services.
- Monitor gas mileage – especially today when gas prices are on the rise, it is important to pay attention to how much you’re using and curbing any bad habits that may be upping your gasoline consumption. You can reduce your gas guzzling by doing things like:
- Using a better quality fuel and oil and change your oil and oil filter every 3,000 miles.
- Checking tire pressure and inspecting tires for uneven tread wear.
- Remembering to tighten your gas cap after filling up.
- Changing air filter regularly.
- Checking your vehicle’s emissions system.
- Replacing worn spark plugs as recommended by the vehicle manufacturer.
- Not being an aggressive driver and heeding the speed limit.
And, if you are in the market for a new vehicle, choose one with lower gas mileage. Perhaps even consider a hybrid vehicle.
- Keep tabs on your auto insurance – every so often it’s a good idea to take a look at the insurance you are carrying as well as your current insurance needs, shop around for the best deals, and make changes as necessary.
By making some slight adjustments to your auto insurance plan, you could see some serious premium reductions. According to MSNBC.com, a simple change like upping your deductible from $200 to $1,000 on a comprehensive insurance policy could add up to a possible savings of 40% or $100 per year on this portion of the policy. Likewise, depending on the age and worth of your vehicle, it might make sense to drop the comprehensive and collision coverage as well. According to Consumer Reports, if your annual premiums exceed 10% of a car’s book value, it makes sense to drop the coverage. If you are looking to make policy changes or find a new insurer, checking out online rates of at least 3 or 4 insurers is recommended by experts.
Published May 10, 2012