1. Do your research
The most important thing to know before you buy a car is that knowledge is power. It’s a mistake to arrive at a car lot without first researching the car you want to buy. You can find out just about anything you want to know about a car online.If you are thinking about buying a used car, research the recent resale prices for that specific car model. This data will give you major bargaining power. If you plan to trade in your current car, research market values for your vehicle, too. Knowing the value of your trade-in can also be a powerful bargaining tool.
2. Look into pre-financing options
Many people obtain financing from the car dealership, but this isn’t fiscally responsible. Dealership interest rates are typically much higher than loan rates obtained from banks and credit unions. Your bank or credit union is one of the best places to start researching car loan rates, and you can obtain ‘relationship discounts’ that you won’t find anywhere else.
Although you may not find the best deals online, you can also use the Internet to review current interest rates. Once you obtain a quote from any financial institution, get the quote in writing. You can then present this quote to the dealership and use it as leverage to negotiate a lower interest rate.
3. Shop around
Unless there is an emergency situation, shop around before you buy a car. It might also make sense to explore out-of-town car dealerships. Dealerships price their vehicles differently depending upon their location.
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4. Negotiate terms
Next to buying a house, purchasing a new car is one of the most important investments you will make in life. In fact, you may be paying off this car for the next four, five, or six years.
Let the salespeople know up front that you’re not going to be taken for a ride. Do everything you can do to negotiate the car loan and knock the purchase price down. Start with a ridiculous number, and work backwards. If the salesperson gives you an offer that includes a monthly payment of a certain amount based on a 60-month loan, tell them you want the same payment with a 48-month loan.
Walk into the dealership with confidence, stick to your guns, and don’t feel bad about walking away from any offers. It might also be helpful to practice your negotiation strategies and tactics to prepare.
5. Look at both new and used cars
In the past, buying a gently used car was the best way to save money when purchasing a vehicle. A big reason behind this logic is that new cars depreciate considerably the moment they are taken home from the dealership.
Unfortunately, more people are holding onto their cars for longer periods of time before looking for a replacement. As a result, prices for used cars have increased significantly, making new cars a more realistic option.
Ultimately, make sure to go into the buying process with an open mind, considering both new and used cars and running the numbers before making your final decision.
6. Don’t mention your trade-in
You should play your cards close to you in all aspects of the car-buying process, especially when it comes to mentioning your trade-in. Do not mention your trade-in until the end of the buying process. Why? The dealer will likely use this information against you.
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7. Factor in insurance costs
Factor costs for car insurance premiums into the purchase price of your car. The cost of insuring a car is a major factor in the overall cost of the vehicle. Get insurance premium quotes online by providing information about the car’s make and model and personal information including age, marital status, and driving record.
8. Avoid impulse buying
Prevent impulse buying by conducting extensive research before you buy a vehicle. Buying a car on a whim is a risky endeavor. You might realise after it’s too late that you can’t afford the car, or you may find that the performance of the car just doesn’t meet your expectations.
By researching the make, model, and style of the car, and reviewing insurance rates and financing, you should be able to put yourself in a car that you will enjoy for many years to come.
9. Don’t purchase the add-ons
Buying a new car is a major purchase, and you may be paying it off over the next several years. If you finance the car, the overall costs for accessories will skyrocket, so keep the add-ons to a minimum. You don’t really need heated seats, and you can buy a portable GPS navigation unit online for much less than expensive built-in systems.
Rust-proofing is another add-on you don’t need despite what the salesperson might tell you. VIN etching, a rear camera, and a dealership maintenance plan are more add-ons that you don’t really need.
10. Buy a car you can afford
If you are considering buying another car before your current vehicle is paid off, you need to seriously reassess whether or not you can really afford to buy another car. You don’t want to be saddled with an upside down car loan.
A much better option is to wait until your current vehicle is paid off. Then set aside the money that used to pay for your monthly car payment in an interest-bearing account for one year, while continuing to drive your old car.
SOURCE: www.moneycrashers.com
