4 Best Ways To Buy a Car If You Live Only on Social Security
According to the SSA, the average Social Security payment is $1,770.71 monthly. The program never intended these benefits to provide a retiree’s full income, but for many older Americans, Social Security is all there is.
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With such little financial wiggle room, buying a car might seem impossible — but it doesn’t have to be. “While purchasing a car solely on Social Security income presents a unique financial challenge, it can be achieved with strategic planning and responsible budgeting,” said Abid Salahi, co-founder of FinlyWealth.
If you’re a retiree living on just Social Security, here’s how to buy what may be the last big-ticket purchase of your life.
Forget That New Cars Exist
According to Kelley Blue Book (KBB), the Nissan Versa is the least expensive new car on the market. It starts at $16,390.
Even if you can put 20% down (which you probably can’t), and even if you don’t pay sales tax or title, registration, delivery and other fees (which you will), and even if you get a loan at 6% interest (which you won’t), your payment would still be more than $250 per month.
“I get the struggle of relying on Social Security for retirement,” said Rhett Stubbendeck, finance and insurance expert and CEO of Leverage Planning. “I had a client, Jenny, who lived on Social Security alone. Getting wheels seemed like a puzzle, but we cracked it. She went for a reliable used car, and it was a game-changer. It was both cost-effective and practical.”
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Focus on Reliability as Much as Cost in the Used Market
Stubbendeck mentioned reliability and practicality. Those are the keys because, in the used market, the lowest-priced vehicle’s also usually the cheapest. If you focus solely on the sticker price, you’ll end up with a beater costing you more in the long run with expensive maintenance, repairs and gas.
“Remember, a lower initial purchase price doesn’t necessarily translate to long-term savings,” said Salahi. “Aim for fuel-efficient vehicles to minimize running costs.”
Research, Research, Then Research Some More
Shopping for the car you want is the fun part of the buying experience, but if Social Security is your only income, you don’t have that luxury. Instead, you need to shop for the car you can afford.
“Thorough research is crucial,” said Salahi. “Explore used car options within a realistic budget, considering ongoing maintenance costs.”
According to US News and World Report, the 2013 Buick Verano — with a J.D. Power reliability score of 91 out of 100 — is the most reliable used car under $10,000. You should expect to pay $9,851 — but other famously dependable options are available for even less. The highly rated 2013 Hyundai Sonata averages just $7,306. Also in the top 10 is the 2013 Hyundai Accent for $7,927.
Seek Help From Charities and Assistance Programs
Although used Sonatas and Accents cost less than half of what you’d pay for a new Versa, $7,000-$8,000 is still out of reach for many retirees living on Social Security alone.
“For others in a similar boat, check local community programs or nonprofits that lend a hand to seniors needing affordable rides,” said Stubbendeck. “Jenny found a great deal through one of these.”
For example, Vehicles for Change provides free cars to qualifying residents of Maryland and Northern Virginia. Working Cars for Working Families maintains a state-by-state list of organizations that offer down payment assistance and even free donated cars to those in need.
Other programs include:
GoodNewsGarage.org
FreeCharityCars.org
Cars4Heroes.org
1-800-CharityCars
State and federal government agencies also offer vehicle assistance grants to qualifying applicants. Visit gov-relations.com for more information.
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