Six Steps to Reducing Automobile Expenses

Suburban America requires a car. You can't get anywhere without one, yet this is where 65% of American families choose to make their homes. Unfortunately, many suburbanites fall into a cycle of jealousy and one-upmanship about the car(s) they drive. This cycle puts unneeded pressure on the budgets of ordinary Americans. It is possible to remove oneself from the cycle of new car debt by taking some of these 6 simple steps.

Step 1- Have a Make/Model Reality Check

It is wasteful to own the most car you possibly can. A $50,000 car arrives at the destination as quickly as a $10,000 one. But cars have always been a status symbol. The available array of car makes, models, and features allows people to declare their income and personality in the car they drive. Take the proliferation of SUVs: in the 1990s, suburban parents shunning the image associated with a traditional minivan and chose to drive gas-guzzling behemoths that cost twice as much.

There are two components to a car reality check: the age of the car and the price of the vehicle. It is a waste of money to have a newer-model car. The price of the vehicle is a little more flexible. Consumers should select a vehicle that meets their needs (transporting children, work-related items), but offers good value. Flash is not worth the price you pay, and neither are premium brands. Consider that Jaguars have a reputation as being one of the worst mechanical brands of car.

Step 2- Downsize Your Garage

Consider the possibility of owning fewer cars. Does a two person household really need two cars? The cost of access to a car is higher than most people think: maintaining the average car will cost $7000 a year to own and operate, according to the American Automobile Association. Investigate car-sharing services like Flexcar and Zipcar. These services offer vehicles to occasional drivers at an hourly rate.

Families can still save by using other modes of transportation, even if excess cars aren't sold. According to the American Public Transportation Association, the average worker can save $100 a month in gas and wear by riding public transit. Walking or riding a bike promotes a healthy lifestyle. If these alternative modes aren't an option, carpool with a family member or coworker.

Step 3- Pay Cash by Driving Out of Debt

One can easily drive their way out of car loan debt by keeping your car a few extra years. The average car in the US lasts for 9.2 years. With proper maintenance, a modern car can easily last for 150,000 miles or more. As a general rule, a car should be driven for two years after it is paid in full. During this two-year period, the owner can put aside $300 a month instead of making a car payment. This will net $7,200 that can be applied to the purchase of the next automobile. Coupled with the trade-in value, the next car should be able to be purchased for cash.

Step 4- Give Your Insurance a Tune-up

Every driver should always have adequate car insurance. If state laws aren't enough to convince you, consider that one in eight people will file a car insurance claim in the next ten years. A collision that totals an expensive car or causes even minor injuries can easily force a person into bankruptcy. There are plenty of ways to reduce the costs of automobile insurance while maintaining proper coverage. With a little legwork and a computer, the average consumer can shop for deals on the Internet. Other discounts can be applied, such as membership discounts, education bonuses, and a clean driving record. Many companies now offer discounts for those who drive fewer miles than average.

Deductibles should be set as high as the consumer is comfortable shelling out in a one-time payment. Most consumers should target a $1000 deductible, while others may push as high as $2500. If the car is worth only double the deductible, collision insurance can be dropped from your coverage, saving up to 50% of the total bill.

Step 5- Absolutely, Positively Do Not Lease.

To someone attempting to "keep up with the Jones'," leasing a car seems appealing. He or she can always drive the latest car for about the same monthly cost as making payments. However, leasing cars is simply a terrible financial idea. At the end of the lease term, the individual owns nothing. There is no car to trade in as a down payment on the next car. In addition, the leaseholder is subject to restrictions and penalties for mileage overages or minor damage to the vehicle.

Step 6 - Buy Quality Used Cars

Cars are a depreciating item. The National Automobile Dealers Association estimates that a third of a new car's value disappears as soon as it driven off the lot. Why be the person who takes such an enormous financial hit? Consumers should target purchasing a 2-3 year old car that has less than 40,000 miles. Cars in this age and mileage range still have a factory warranty, which removes worry about buying a car with a defect. Used car customers also can put the power of the Internet to work for them. All potential cars can be checked for odometer tampering, prior collisions, and water damage by using services like CarFax or AutoCheck.

Purchasing a used car requires a dealer that is trustworthy. To find one, check with family and friends who have chosen to step off the cycle of automobile debt.