Whether you’re thinking about buying new or used, a car is one of the biggest purchases you’ll ever make. If the mere thought of visiting a car dealership fills you with anxiety and makes you instinctively clutch your wallet, read the tips below before you purchase your next vehicle.
Separate your needs from your wants to avoid paying for extras that you can’t afford.
1. Do Your Homework
Before you even step foot in a car dealership, take the time to research the vehicles that interest you. Visit sites like Consumer Reports or Kelley Blue Book to compare prices, read reviews, and find the best value for your money. Look for video reviews on YouTube (by dealerships or consumers) that evaluate vehicle features and show test drives. You may discover a model that you didn’t know about or find that a used car is the best fit for you.
2. Check with Your Insurance Company
When calculating the cost of owning a car, include the insurance policy you need to buy in order to protect you and your vehicle. No matter who your provider is, your insurance premium will change depending on the type of vehicle that you buy. Once you’ve narrowed down your choices, call your insurance company and get auto insurance quotes for each model that you’re considering.
3. Research the Dealerships
Do background checks on the dealerships in your area in order to find out more information about who you’re buying from. Look at Better Business Bureau ratings and online customer reviews to get a feel for the quality of service and other car buyers’ experiences. Also look at which dealerships are offering special deals, sales packages, or great financing opportunities.
4. Buy at the End of the Month
After you’ve researched, looked at multiple dealerships, and taken test drives, wait until the end of the month to buy. Car salesmen and women work on commission and often get bonuses for the amount of vehicles they sell in a month. So, they may be more willing to agree to your terms if you come in during the last days of the sale cycle. This is especially true in December and January, when dealerships generally sell the least amount of vehicles.
5. Pay Cash
A vehicle’s value depreciates as soon as it’s driven off the lot, so why pay more in added monthly interest for a loan? If you can afford it, paying cash up front saves you money over time, and gives you more power to negotiate at the dealership. Dealers are more likely to work harder to get you in the car that you want if they know that you are ready to pay in full.
6. Shop Around for Financing
If you don’t have enough cash to pay for your entire car purchase, save up for a substantial down payment (ideally 20% or more), and choose your financer carefully. Car dealerships make money through their financing department, so their deals are usually not the lowest. Get your credit score, and check with your bank and your local credit unions to see who offers the plan that fits your needs.
7. Avoid Extended Warranties
When a salesperson offers you an extended warranty, he is typically asking you to purchase a service contract through his dealership–not a contract with the car manufacturer. This is yet another way that dealerships make money, especially since car owners rarely take advantage of this service. If you are buying a used car or know you will own the car for a long period of time, take time to understand the car’s original factory warranty. Then look at extended warranties offered by independent companies and compare them to the one offered by the dealership.
The more prepared you are before you walk into the dealership, the more confident you’ll be when it comes to buying the car of your dreams (and getting it for the price you want). Give yourself some time to close the deal, and be willing to walk away from the table if the salesperson is pressuring you into paying a price that makes you uncomfortable.
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Photo Credit (top picture): Local Manhattan Beach
written by: Stephanie Marbukh
Stephanie Marbukh is a freelance blogger who writes about a variety of topics including money-saving tips and home maintenance.
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1. Do your homework
DO not waste your time looking at Kelly Blue book… Dealerships and wholesalers look at what the vehicles comprable bring at auction and they check NADA and Blackbook values. This is how they buy and trde vehicles, not by looking at Kelly blue book. KBB is an easy way to be disappointed.
3. Do your homework
I f A dealership offers special financing just make sure your aware that it is W.A.C ( with approved credit ) If you have a lower beacon score you may or may not qualify. When checking your credit also know your credit score may be lower, or even higher than what you see. Dealerships pull 5.0 and 9.0 (versions of credit bureaus) Not everyone is on 9.0 yet. SO sometimes there is confusion when for ex. you pull your credit and you are a 780+ and when the dealership pulls 9.0 your a 725. If you have lower beacons 679 and below rates do get higher. DEALERSHIPS work to get you the best rate and the most money from the bank in order to get you the vehicle YOU want.
5. Pay cash
Note that if you pay cash your not building your credit portfolio. Finance your vehicle for 12-24 months then pay it off. the interest you pay will be minimal, keep the rest in a savings and gain a bit of interest to make up for some of it.
6. Shop around for financing
A lot of dealership do that for you, especially franchise stores. WHich alot work with credit unions, check with the dealerships and see if they work with your credit union. That will save you some footwork, and less paperwork. If they do not then Ye sI would consider goingt to your credit union.
7** Avoid extended warranties
WRONG. Dealerships do offer warranties, but negociate. If it is a pre-owned vehicle your purchasing I would highly recommend a warrany. You do not know how a previous owner treated the the vehicle or what could happen! Price however, try to find out whats the best price on one, but purchasing one is Worth looking into.
** I am A finance specialist for secondary credit, and when I see post like this it upsets me when customers are stered in the oppisite direction.