It is a fact that a new car purchase is probably the second largest purchase you are likely to make. This makes buying the right car for your needs a very important decision. Before you start shopping think about what type of vehicle you need. Do plan on car-pooling or will you be the only one in your car? How much will your budget allow? How much of a down payment can you come up with?
High pressure salespeople will try to get you into the most expensive car possible. Do your homework and be prepared to stand your ground.
- Decide how much you want to spend
- Do not get tricked into extras or options you don’t need
- Get a pre-approved loan
- Research several similar types and models, in case a certain car doesn’t meet your expectations
Ask to See the Dealer’s Invoice
The dealer gets rebates, discounts, incentives and various other reductions. This gives him negotiating room, so don’t be afraid to haggle. The invoice shows the initial cost before discounts. When you know the invoice price you know exactly how much wiggle room you actually have.
The Monroney Sticker Price shows the base price, factory installed options and the manufacturer suggested retail price (MSRP). It may also include other important information. Federal law states this label can only be removed by the purchaser, so make sure the car has the sticker before you buy!
Paying For Your Car
In most cases, you will need a loan to buy your new car. The dealer will offer to arrange financing for you, but you will have more negotiating power if you walk in with your finances in place. You will likely get a better deal from an independent lender, as well.
Your credit score
The main deciding factor in terms of interest rates and which lenders are willing to lend you money is always your credit score. Keeping your credit in good standing is easier said than done. If you do have a low credit score, maybe you should hold off on buying a new car until you can get your record cleaned up a bit. Maybe settle for a cheaper car in the meantime.
The down payment
If you can’t save the money for a down payment and your old car is still in pretty good shape, you could use it as a down payment. This known as trade-in. The dealer won’t give you nearly as much as you would get from a private sale, but if you don’t have time to wait until your car sells, trading it in is a viable option.
Read the Fine Print
Before you sign anything make sure you understand and agree with everything stated on the contract. Some dealers may give you a “cooling off” period or a “trial period”, but in most cases, once you sign you are bound. The same goes for your loan agreement!