Insider Tips On What To Know Before You Buy A Car
Do you feel you got the best deal on your last vehicle purchase?
Save Time And Money By Doing Your Homework
Doing your homework before you walk into the showroom to buy a new or used vehicle is a must. It can save time, prevent hassles and nasty credit surprises or worst of all--getting in over your head on a loan.
The first step is the most important: know what you can afford. So many people "guesstimate" or ignore this altogether. This is the biggest single mistake you can make in the car-buying process. Sit down and write out your expenses. This is the time to be brutally honest about what you spend.
Subtract your added monthly expenses from your monthly income. Be conscious of the fact that a newer car means a higher car payment and your car insurance may increase as well as the excise tax. Make sure your budget includes maintenance, repairs and gas. A good guideline I have found is that total transportation expenses should not exceed 15% of your monthly income. I have included links to a great budget calculator and a car loan payment calculator below.
- Home budget analysis
Bankrate.com provides a FREE home budget calculator and other personal finance calculators.
Auto Loan Payment Calculator
Looking for an auto loan calculator? Bankrate.com provides car loan and auto loan calculators to help with your buying decision.
Once you have decided on a payment that you can afford write down that number. Bring this info with you when you talk to the salesperson. You are less likely to get talked into something you can't afford if this is staring you in the face.
Next you should check your credit. The interest rate you receive on a loan is contingent upon your credit score. Even if you are confident you have good credit it pays to take a few minutes and check for errors. I have seen people with excellent credit get an embarrassing surprise when errors were found on their credit report. It takes time to clear up errors and you will be unable to complete the purchase of your new vehicle until it is done.
Federal law states that you can review your credit report for free once each year. This does not include your credit score, but it is a great way to check for accuracy. Information is available here on how to correct anything that is wrong. A link to that website is below:
Free Annual Credit Report
The next step I recommend is to make a list of everything you are looking for in your next vehicle. Separate the list into "Wants" and "Needs" and prioritize them accordingly. It is unrealistic to assume, however, that you will get everything you want and need especially on a budget. Know what is most important to you. A good salesperson will ask this early on in the process and help you find the vehicle that best suits your list. It can save considerable time and frustration if you have given this some thought already.
Another thing you can do to make the car-buying process easier is to check the dealer's inventory online. Pick two or three vehicles that match your budget and requirements. Limiting your choice to just one can end in heartbreak if that vehicle is already sold when you arrive. Do some quick internet research on the models you have selected.
Do not be alarmed if the salesperson steers you toward something not on your list. Sales staff are trained to match your needs to appropriately equipped vehicles. He or she may have a better idea of what will suit you, or may have a vehicle that has not yet been posted on the website. Keep an open mind, but be firm in saying "no thanks" if you feel the vehicle is not right for you.
The last two steps relate to your trade-in vehicle. It is important to know the balance due on your current vehicle. If this does not appear on your monthly statement call your lender. Most banks have an automated 1-800 phone number that can provide this info in a few minutes. If your trade is paid off..great!...all you need to do is present your title when the deal is done.
The last step is to determine your trade's value. Accurately evaluating a used car's value is a skill that even experienced auto professionals struggle with. Fluctuating market values and consumer demand affect your trade's value as much as its condition. Understand that no matter how pristine your vehicle may be the dealer has to perform (at minimum) a mechanical check and probably some reconditioning before placing it for sale on his lot. The cost of this will be reflected in the value the dealer gives you on your trade.
Different dealers use different sources for their pricing info. I recommend that you check at least three sources and come up with an average amount. Links to some common sources are listed below.
- Kelley Blue Book Used-Car Values: Cars.com
Buying or selling a used car? Find out what it's worth using our used-car price and value lookup tool.
- Used Cars - Edmunds.com
Research Used Cars at Edmunds.com. Compare Used Car Prices, search listings and Reviews, and determine the TMV trade-in value of your Used Car before you sell it.
- New Car Prices, Used Car Values, New Car Reviews & Car Buying Guides - NADAguides.com Official S
See new car prices, used car values, car buying guides, car reviews, specs, safety ratings, photos, videos, car comparisons, tips & advice at the official site of NADA Guides, the recognized authority on vehicle values since 1933.
- Galves: Better than Kelly Blue Book for used car values!
Galves used car values
Congratulations! You are now an informed consumer. Armed with this knowledge it is far more difficult for anyone to take advantage of you. Bring this info with you to the dealer. It will not only make the car-buying process quicker and easier, but your salesperson will respect and appreciate your efforts. Happy driving!
Know Your Numbers
True or False. You have to accept the interest rate the dealer offers you if you finance through the dealership. (Answer below).
False! If you have decent credit ask the finance manager to check several banks to see which offers you the lowest rate. If it is still higher than you would like to pay then check with your local credit union. They often have the lowest rates on auto loans.