The car buying process can be arduous and daunting. First-time buyers, however, usually gain the necessary knowledge after they have signed on the dotted line. Not everyone has to go through the “trial and error” part of the process if they use these tips as a guide. The goal is to empower yourself with the necessary tools to devise a plan and negotiate car buying intelligently.
Knowing what you can afford
Figuring out how much money you have for the car is the most important part of the process.
- Can I pay for the car outright?
- Will I finance it?
- How much will my down payment be?
- What type of monthly payments can I afford?
- How long do I want to stretch out my payments?
Knowing these figures can help you key in on the best possible car that fits your needs and budgets.
Learn about the car (or cars) you may be interested in. It is a good idea to compare and contrast the car you are most interested in with others in its class.
Edmunds.com has a handy compare and contrast feature and easy to use search engines. Here you can find reviews of the car you are interested in, done by major publications, as well as write-ups by current owners. You can also see how much others in your area are paying for new and used cars.
The next big step in research is test-driving. Test-driving a car gives you a better feel for the car you want and may turn you on to a car you prefer. Keep in mind that no matter what the salesman says or how much you love the car, its better that you do not buy the car that day. Go home, regroup and make a game plan.
Keep in mind you don’t have to buy from the nearest dealership. Surrounding dealerships might offer you a better deal or have a larger selection. Certain regions and dealerships have promotions and rebates on certain models that can help cut down overall costs.
It is also good to know that certain features and add-ons—like anti-theft devices—qualify for insurance rebates or discounts.
When you go to a dealership you’ll probably get quoted the “sticker price” or “MSRP” (manufacturer’s suggested retail price) for a car. Know that this price is usually very negotiable. It’s very helpful to find out the invoice price, which is how much the dealership paid for the car and use it in your negotiations. You can find the invoice price through sites such as Consumer Reports and Fighting Chance.
Confidence and Patience
Walking into a dealership nervous and uninformed is probably the worst thing you can do. A salesman that senses a slight hint of uncertainty may employ dubious tactics to get you to bite on a deal you will later regret.
On the other hand, if you approach the situation with confidence, a dealership will treat you seriously and most importantly, honorably.
Always know you can walk out the door and be prepared to if you do not like how things are going or if a salesperson is pressuring you. As a buyer, you have the upper hand because it’s easier to find another place willing to sell you a car than for the car salesperson to find someone willing to buy a car.
Bringing a calculator to the dealership, as dorky as that may sound, allows you to figure out numbers for yourself. Be prepared for a salesman to throw figures at you that make little to no sense. Knowing the exact numbers for add-ons, destination charges, taxes and DMV fees will also help you understand the total price.
Most importantly, remember that you are the customer and the dealership must satisfy YOUR needs. Don’t rush into signing papers. Remember that you have every right to negotiate the car’s final sale price.
Look for the best APR
It is a good idea to know what your credit score is if you plan on financing the car. Different dealerships work with different lenders and depending on your credit, APR (Annual Percentage Rate) rates can vary. First-time buyers may consider having a parent co-sign or getting a loan through a credit union.
Warranties and Certified Pre-Owned
If you plan on keeping the car for many years, it’s smart to pay extra for extended or lifetime warranties. Dealerships usually have different warranty packages for different prices. It is a good idea to purchase a warranty that covers all (or some) moving parts in the car and drivetrain. Paying a little bit now will save you money on repairs as your car ages.
Those who consider buying used, should think about purchasing a certified pre-owned vehicle. These used cars are sold at dealerships and are under warranty. This may be a good alternative if you want the safety of a warranty without paying new car prices.
Without a doubt, buying a car requires a considerable amount of effort, but you don’t have to feel “scared” or “taken advantage of” during the process. Doing research and knowing as much as possible about the car you want to purchase goes a long way. The biggest mistake car buyers make is charging blindly into the dealership where they are instantly vulnerable to pressure tactics and intimidation. Filling your brain with as much knowledge about the process allows for you to negotiate with a clear mind.