Buying a car does not have to be the dreadful task many people believe it to be. If you have reasonable expectations and are willing to do your homework, you’ll actually find great cars at even greater prices. The following are all points worth considering to help you be more relaxed and confident during the car-buying process.
When looking to purchase a car, the obvious first step is to determine your budget. What is the total amount of money you have available? This should be a firm and fixed number so that you will not be tempted to exceed your budget during the purchasing process. As a rule of thumb, try to put down at least 10 percent cash or cash value, such as through a trade-in if financing, and do not let the total car investment exceed 10 percent of your monthly take-home pay. This leaves room in your income to cover costs such as fuel, insurance, and regular maintenance.
You should also leave a cushion for emergencies. Even if you purchase a car new off the lot, you may encounter a reckless driver who does excessive damage to your vehicle. Now, not only do you have to worry about finding the best auto body repair in Newport, OR or your local town, but you may also be in physical pain following the accident itself. In such situations, it may be best to consult with an experienced car accident attorney to find out if you are entitled to monetary compensation. Regardless of the outcome, having money set aside for such emergencies is a smart move and one that should be heavily considered when planning out your budget.
Making the right choices during the financing process is very important, as these decisions will follow you throughout the term of your loan. Your FICO score is possibly the most impactful variable of the financing process. The higher the score, the lower the interest rate and terms. If you are planning on buying a car in the near future and are saving for a downpayment, it may be best to use that time to work on your credit score.
There are numerous resources available to help with that. In Improve and Increase Your Credit Score by author Jason Rich, you can learn the basics of credit scoring and ranking, and the steps you can take to improve your number, as well as the many things to keep in mind when applying for and using your credit as part of your purchasing power. Good financing decisions will be important in your ultimate deal making.
If you can get prequalified by your bank or credit union, you will enter the dealership with considerable leverage. In such a scenario, you will be negotiating as though it were a cash sale. Dealers are incentivized to have their customers use the dealership’s’ or manufacturer’s preferred financing vendors such as Toyota Credit, GMAC Credit, etc, as it adds to their bottom line. Although there is nothing wrong with financing your car through one of these major lenders, negotiating with cash or pre-qualified financing is advantageous. Given the opportunity, you can shop around for the best financing just as you would for any consumer product. Kelley Blue book offers a simple auto loan calculator to help with advance planning on payment amounts and compare financing options based on down payment amounts and interest rate. This is an excellent tool to use when shopping for your best financing deal.
The car itself
When choosing the best car for your needs, it is imperative that vanity take a “back seat” to common sense and practicality. That does not mean that you should buy a minivan if you are a single student, or a compact sedan should you work in construction. Simply stated, the buyer should take the following things into consideration: Their lifestyle, which can dictate size and style, their job, which can dictate the design, and where they live to help determine whether a heavy-duty car or convertible would be better.
It is most certainly possible to choose a car that fits your lifestyle and is still pleasurable to own and drive. Once again, being prepared to shop smart will dissuade you from the temptation of impracticality.
New or used?
Today’s pre-owned car market is more robust than ever, and there is a reason why. Cars are being built better than ever before, therefore lasting longer. It is not uncommon for a car that has been well maintained to reach over 100K miles or last between seven to ten years. The primary considerations are mileage, maintenance history and, of course, any history of accidents. The advent of companies such as CarFax, Vincheckup, and Autocheck, among others, make it simple for a prospective buyer to learn the history of any pre-titled car. It is always preferable to have an independent mechanic check out a used car before your purchase, and of course, a reasonable warranty should accompany any used car. You may even consider purchasing an extended warranty for a used vehicle for additional peace of mind.
Choosing the dealership
Dealerships can be as different as night and day — so can their prices. Be patient and prepared to visit several in order to compare deals. Some considerations to keep in mind are proximity to your home for maintenance trips and customer service. You should also have an overall good feeling about the dealership, how it is managed, its service department, and the level of professionalism and personal attentiveness. Always ask to tour the service department and meet the service manager. Popular, established hometown dealerships often turn out to be the best option, as they usually have a proven track record of happy customers. For instance, if you live near Pittsburgh, a popular local car dealership in Washington, PA may be a perfect fit. Research the reviews on the dealers you are considering to see what kind of buying experiences others have had, just as you would do for any consumer product. Remember that you will be developing a relationship with the dealership when you buy a car from them, especially the service department.
Alternatives to dealerships
An alternative source for finding a good used car is a car auction where you can find very good prices on cars that dealerships chose not to sell on their lots as used cars. Auto auctions will also have salvage cars for sale, which may be great options to those looking to purchase their first cars. Auto auctions have been around for quite some time, and have become a leading alternative to buying from dealerships, used car lots, or individuals.
In fact, there are now online auctions for even more added convenience. Some auctions are open to the public, others open to dealers only. However, if you do some research, this is a viable option to consider. In any case, it’s important to familiarize yourself with the process and automobile before jumping into a bidding war. All of the pieces of the sale should be right before committing to buying a car from an auction, including price, clear title, insurable, condition, and all of the other normal considerations. Warranty on an auction car can be tricky as it can sometimes depend on its age. If the age or miles has gone beyond the manufacturer’s warranty, you may want to purchase a warranty separately.
As a general rule, whenever purchasing a car at auction, do your research, know the process, and if possible find someone who has the experience to help you.
The buying process
As you walk onto the lot of a dealership or enter the showroom, you will be approached by a salesperson. It’s important to know that in most cases, car salespeople work mostly on commission, so they need to sell to earn their living. Let them know what you are looking for, and be specific. After all, you have done your homework. You can also tell them up front what your max budget is if you wish. If they are conscientious, they will only show you vehicles that match the criteria you have provided. If you are shown more expensive vehicles, remind the salesperson of your budget and requirements. If you continue to be shown cars that do not match the general description in price and style you requested, simply say thanks and walk away, or, if you want, ask to speak to the sales manager to remedy the situation. It is possible they do have a suitable car for you which you are not being shown because it is less expensive.
Once you have found the right dealership, salesperson, and have chosen a car for the right price, you will enter the financial phase of the purchase. Usually, you will deal with a financial person for this process. This individual will go over the bill of sale, finance paperwork, title application, and more, ultimately taking you through the signing process. Short of hiring an attorney to read the fine print, you just have to accept the words on the contracts as boilerplate, but the numbers are a different story.
Study the numbers on the sales contract and the financing contract (if you are financing) to make certain they match what you were previously told during negotiation. Look for any hidden charges on the sales contract that were not disclosed up front. Some of these may be dealer preparation, destination charge, documentation charges, undercoating, floor mats, etc. These extras are items the dealer has added once the car hits their lot and are used to increase the cost of the car. Try your best to get these costs removed whenever possible.
Another item to be prepared for is the pitch for an extended warranty. Some newer cars come with excellent warranties, deeming the extended protection options quite unnecessary. If you want more peace of mind, know that you can purchase an extended warranty later if you choose to, so you do not have to make up your mind that very moment.
Finally, expect a clean, detailed car full of gas when you drive away from the dealership. Those are small things to ask for when you have just given the dealership thousands of dollars.
There are a lot of things to know before buying your first car and a million pieces of advice that can be offered, but the key points to remember when you embark on the car-buying journey are all common sense. It’s surprising how many first-time car buyers go out to buy a car without either a plan or the knowledge needed to make a sound decision. This is true not only for first-time buyers, but also for those who have bought cars in the past but keep making the same mistakes time and time again. With these tips in mind, you can rest assured you will find a top-quality car while getting the most bang for your buck.
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