For most people, buying a car is one of the largest purchases they’ll ever make, second only to purchasing a home. Buying a brand new car is exciting and you can’t beat that new car feel and smell. However, many consumers don’t have a strategy for buying a new car and they can make some serious mistakes in the process. To help you avoid such problems, here are some tips for buying a new car.
-
Start with Your Financing
Before you start looking through dealers’ lots and test driving different cars, get your finances in order. Talk to your bank or credit union and find out what you can realistically afford given your income and expenses. Then make a formal application for pre-approval so you’ll know what you have to work with, and what your required down payment and monthly payment will be. If you wait until you’re at the dealership to find out that there’s a problem with your credit, you won’t be disappointed or humiliated. With a pre-approval in your back pocket, you can sensibly shop, and you’ll know what you can afford.
When you find the car you want at the right price, tell the dealership about the financing rate that you’ve already been approved for, and you may be surprised to get a better offer on terms from the dealership’s financing partners.
-
Check with Your Insurance Agent
Your car insurance premiums are likely to change when you purchase a new car. If you’re buying a sporty car, you may pay more than you are currently. Also, there are certain makes or models that are more attractive to potential car thieves and purchasing one of those may cause your rates to go up, or it may even cause your insurance company to refuse to insure it, and you’ll need to find new coverage.
-
Keep it Simple
Before you visit the car dealership, do some research. There are online resources that will tell you the fair market value of your trade-in as well as the invoice price of the vehicles you’re considering. You can also research the various safety features, service records, and vehicle ratings from services such as Consumer Reports or Car and Driver magazines.
When you visit the car dealership, be careful not to give away too much information at first. The salesman will want to know if you’re trading a vehicle, how much you want for a monthly payment, if you are planning to make a down payment, and a number of other questions that may jeopardize your bargaining power. Select the model you are interested in and negotiate a fair price. Once you’ve agreed to a price, then you can discuss the value of your trade and possible financing options.
-
Beware of Super Long Term Financing
With new vehicle prices soaring, far outpacing the rate of annual inflation, you may be offered a longer term on the loan to lower the monthly payments. Some loans have terms of six or even seven years! Don’t fall for this as it will put you in a position where you will owe more on the car than it’s worth almost to the end of the loan. Be sensible when it comes down to it. Don’t take a super long loan, but don’t saddle yourself with extremely high payments. The car you end up with may not be your dream car, but buy a car that will fit your needs, and one that you can easily afford.
Final Thoughts
To get the best deal on a new car, you need to be careful. Following these tips can help you to navigate the whole process and end up driving away with a car that will suit your needs and your pocketbook.