Even for frugal parents sometimes there’s just no way around it… You need wheels to get around. To daycare. To the grocery store. To work. To the laundromat. But the hard reality is that not everyone can afford a vehicle to get them from place to place… Especially low-income families!
It actually costs more to be poor, due to higher prices in poor areas of town along with higher (sometimes predatory) lending rates. Groceries at the corner store. Loans of any kind. Furniture for rent. Even car insurance. All of these cost more for lower income families.
This higher price on daily essentials is closely related to mobility… Without a car, instead of driving to a larger grocery store in another neighborhood, you’re forced to shop at the local corner market. These small markets charge more for their products because they don’t stock large quantities, so lose out on “bulk discounts.”
And if you venture to another neighborhood to shop, you’re losing something equally as valuable – your time. You wait by the bus stop. You wait in line. You wait for the subway. Traveling to these places to save money ends up costing you hours and hours of your time.
If you find yourself without a car, but desperately needing one, you’re not alone. So, we’ve put together a list of some of the best ways you can afford a car without breaking (or ROBBING) the bank – and best of all, while fighting back against the higher prices!
1) Shop on Craigslist
Craigslist has a wide selection of used vehicles that are being sold by dealerships and private parties. Search by city or surrounding area to find vehicles that fit into your budget. Some private sellers will even accept (and perhaps prefer) cash as a payment option, so you can avoid financing all together.
2) Search online
Use a site like Auto Trader to find a used car near you. When searching you can enter preferences like what type of car you’re looking for, your maximum budget, the car’s age, and more. You’ll be provided with a list of vehicles in your area by both private sellers and dealerships.
3) Check around your neighborhood
If there are vehicles in your neighborhood with a “For Sale” sign, check them out. You may just find something that fits in your budget. If you’re not car-savvy yourself, bring along a friend when looking at the vehicle to make sure it’s mechanically sound.
4) Do your research
Once you’ve narrowed down the type of car you want to purchase and have set your ideal budget, do your research. Being uninformed on the true value of a vehicle can cost you quite a bit of money in the long run because you won’t know what’s fair. Knowing the true value will also help you negotiate when it comes time to purchase a car. Check out sites like Edmunds and Kelley Blue Book to determine the vehicle’s value.
5) Avoid high-credit dealerships
Some dealerships and financing companies in low-income neighborhoods charge an exorbitant interest rate. One of the most well-known across the United States is J.D. Byrider, who calls themselves the “leading used car and finance company franchise.”
Simply put, the business provides cars to people who need credit. In fact, you can purchase the entire vehicle – down payment and all – entirely on credit. J.D. Byrider has an in-house used car financing company that is designed to help customers with poor or zero credit. But, with it comes a staggering high interest rate – some up to 25 percent. Be sure to research dealerships before you visit to make sure you don’t get sucked into paying an interest rate you can’t afford.
6) Avoid credit services when possible
Low-income neighborhoods are filled with payday lenders, auto-title lenders, and other financial institutions that charge a high interest rate of 30 to 40 percent. If you have the means to visit a bank or credit union, get your financing from them instead. You’ll save hundreds of dollars in the long run, whether you’re buying a car for $2,000 or $10,000.
7) Negotiate low-interest loans
A study showed that throughout the United States, those earning less than $30,000 per year (on average) pay up to two percent more for a car loan than higher-income buyers. Work with your bank or credit union to find a fair interest rate that fits in your budget.
Consider the above tips when searching for an affordable car. Taking even one of them into consideration can help you save hundreds – even thousands – of dollars in the long run.
Pam King writes on frugality, safety and insurance literacy for Direct General, a low cost and customized car insurance rate provider. When not saving money on her insurance, Pam enjoys knitting, NASCAR, family and watching rollerderby! 🙂