Buying a car can seem like a daunting task if you have never done it before. It can seem like a daunting task for people who have done it before. So what should you know before you go to the car dealership to buy a car?
Important Tips for Buying a Car
- Never impulse buy: It goes without saying, but don’t impulse buy a car. The cost is entirely to high to buy a car like you buy a pack of gum.
- Research. Knowing the facts before heading to the dealership will help save you time and money. One of the biggest mistakes that can be made when buying a car is not researching before. You can find out just about everything you want to know about a car can be found online at sites like Auto Trader, Consumer Reports, and Kelley Blue Book. If you are buying a new car you will want to know the “invoice” price and not just the MSRP. The “invoice” price is what the dealership paid to get the car. Knowing this price will help during the negotiations. If buying a used car, you will want the most current value of the car and the resale price. Also, if you are trading in a car, know how much your car is worth.
- Think about pre-finacing. Oftentimes the interest rate that you get from the dealership is higher than if you received a loan from your bank or credit union. Many times you can receive a “relationship discount” that you would not receive anywhere else. While you might not be able to get the best financing deal online, you can use the internet to get an idea of interest rates. Once you get a quote from any financial institution, get it in writing. Then when you go to the dealership, you have the quote and may be able to negotiate a lower interest rate.
- Shop Around. Unless you are backed into a corner with no other options, always shop around. Talk to a dealership and get their rock bottom price. Then see what the other dealerships offer. Think about trying dealers in other towns since location can change the price.
- Negotiate: Buying a car is an expensive purchase. It is usually the next biggest purchase with the exception of buying a house. Do not take the offer just because they offer it. Start with a very low number. Let the dealership work you backwards to a price. If they offer you an amount based on a 60 month loan, negotiate back and try to get the same price at a lower month, like 48-month loan. If you have done your research, walk into the dealership with confidence. Stick to your guns and don’t be afraid to leave the offer.
- Look at the overall price, not the monthly payments: If the monthly payment of the car is a great price, but the terms of the loan is 72-month loan, then it is not a good offer at all. Negotiate the overall price, and make sure you know all of the hidden fees. The fees that can often run up the price of the car are various taxes, car preparation and delivery fees and dealership costs. These are fees the sales person will not mention unless you ask.
- Negotiate the Trade-in separately. Wait until you have gotten the lowest price possible for the car you are buying. Once you have that price set, then mention your trade-in. If the dealership knows the trade-in before hand, they can use that to keep you from the lowest price. If you have negotiated the price to $15,000 and then tell the dealer about the trade in, and you are receiving $2000 for the trade-in, your price is now $13,000.
- Don’t purchase the Add-Ons. Do you really need those heated seats? Do you have to have the built in GPS or can you live with the portable one? The rear camera is nice, but is it worth the extra cost of the car. Think about these things before accepting things like rust-proofing or VIN etching. Keep the add-ons to a minimum so you can keep the cost low.
- Don’t Buy the Extended Warranty. If you are buying a new car, the coverage of the extended warranty is often limited and doesn’t cover many of the types of mechanical failure in new cars. The new car is going to come with a manufacturer’s warranty that provides enough coverage for your car. If you are buying used, check into what is left of the original warranty. Why not bank the money you would be paying for the warranty and save it for if there is an issue.
- Always test drive. Think about everything need when you are test driving a car. If you have children, bring them with you. You will want their opinion of the comfort level of the car. How does the car idle? Can you see from all of the mirrors? Use all of the controls. Turn on the heat or air. Use the turn signals. Turn on the wipers. Make sure everything is easy to use. How does the car take turns? Does it accelerate nicely and how does it brake. If you are buying used, take this time to also see your mechanic.