10 Tips For Buying The Right Car
1. Set your budget
Know what you can afford before you start car shopping. This will help ensure that you don’t get in over your head financially for the length of your car loan. When you’re at the dealership it’s easy to be enticed by all the bells and whistles. Having a firm budget in mind at the start will help you resist the urge to overspend when you’re in the thick of things. A good rule of thumb is to allocate no more than 20 percent of your household income to all the cars being driven by family members in the household. Include your car loan payments and all expenses, including insurance, gas, repairs and maintenance.
2. Develop a short list of car choices
You’ve probably been noticing certain cars on the road for a while and have an idea of what appeals to you so start by researching the models you’re interested in at CarSoup.com Read independent reviews, safety reports and look for customer feedback Look for the retail and invoice prices for new cars and use CarSoup.com to help determine the current range of prices for vehicles in your market that meet your criteria.
3. Weigh the pros and cons of new verses used
Buying a new car within your set budget might mean you’ll get fewer features for the money, but you’ll have the advantage of a full new car warranty and possibly some additional free maintenance perks from dealers and manufacturers. If you buy a used car, you’ll likely get more car for your money, but you won’t know the car’s full history and you’ll have a shorter warranty period, or possibly no warranty at all. Used car loans also typically have higher interest rates and shorter loan periods than new car loans.
4. Research all ownership costs
Remember that your cost of ownership only begins with the car payment. The ongoing costs for fuel, insurance, maintenance, depreciation, etc., all add up. Auto information websites like CarSoup.com can help you determine average ownership costs for specific vehicles, provide estimates for car insurance and fuel costs and is a good resource for average repair and maintenance data.
Crunch the numbers on the cars you are considering so you have a clear picture of how much they will cost overall. Don’t forget to factor resale value unless you are reasonably confident you will keep the car for a long time. You’ll likely find significant cost of ownership differences between similar cars of different brands, often due to the difference in resale value.
5. Financing: Do your homework first
Financing at the dealership may be easy, but it’s not always the best deal. Dealers are essentially acting as agents to offer you a car loan. They get paid for every loan they write, whether the loan is through the automaker or a local lender. It is possible to get the best car-loan interest rate at the dealer, but you’re likely to find that it pays to shop around first. It’s best to get pre-approved for an auto loan from a bank or credit union, even if you plan to finance through the dealer. Don’t assume you’ll qualify for the zero percent or low-interest rates through the dealer – typically less than 10 percent of buyers qualify. Even if you qualify for the best dealer financing, you may be better off taking the manufacturer rebates and getting financing elsewhere. Also, check with any local lenders you do business with, as well as local credit unions, which often have interest rates that are 1 to 2 percent lower than conventional banks.
6. Find the best interest rate
It’s best to get pre-approved for an auto loan from a bank or credit union, even if you plan to finance through the dealer. Don’t assume you’ll qualify for the zero percent or low-interest rates through the dealer – typically less than 10 percent of buyers qualify. Even if you qualify for the best dealer financing, you may be better off taking the manufacturer rebates and getting financing elsewhere. Also, check with any local lenders you do business with, as well as local credit unions, which typically have interest rates that are 1 percent to 2 percent lower than conventional banks.
7. Take advantage of all discounts
Rebates and incentives abound. Some dealers will offer incentives on certified pre-owned cars or even non-certified used cars. Many automakers have discounts that apply directly to the buyer including members of the military, current students, recent graduates and members of certain local credit unions.
8. Know the car’s price
Auto information websites like CarSoup.com can help you determine invoice prices on new vehicles. For used, look for the average selling prices for the same models in similar condition and mileage in your area. Use these numbers as a guide in your negotiation with the dealer or private party. If you’re buying new, try to agree on an amount close to the invoice price before any applicable discounts are applied, but remember that the dealer needs to earn some profit to cover the costs of running his dealership.
9. Be prepared to negotiate
The Internet has provided a new level of transparency when it come to determining prices. Savvy consumers have all the tools they need to be informed. Do your research and you’ll have a better idea what you should be paying for a specific vehicle. With new vehicles, there’s not as much wiggle room for dealers and many have gone to a fixed-price, no-negotiation approach. If you’ve seen the same car advertised for less elsewhere, don’t hesitate to mention it to your salesperson. Look for other “deal sweeteners” like free maintenance. No two used vehicles are exactly alike but by comparing similar vehicles on CarSoup.com you should get a better picture of what they’re selling for in your market. That’s valuable information to have with when it’s time to negotiate. Vehicles priced significantly over or under the established range in your market should be approached with caution.
10. Take your time on the test-drive
You’re spending lots of your hard-earned dollars and you’ll be spending plenty of time behind the wheel so take extra time during the test drive to thoroughly get to know the vehicle. Make sure you are completely comfortable in the car. Test it on surface streets, in traffic and on the highway. Pay attention to how it handles, accelerates and brakes. Test parallel parking the vehicle and make sure it’s a good fit for your garage. Take extra time to make sure you’ll be happy with the layout of dashboard controls and understand how the features work.