Buying a Car
So you want to buy a new car…here we’ll give you some tips on how to get through the process without going crazy.
Step 1: Doing Your Research
You need to know how much you’re willing and able to spend. You can get a good idea of monthly payments by using a loan calculator.
It’s good to have an idea of what kind of car you’re looking for before you go to a dealership. Know what you need and want from your car and how much you’re willing to pay to get it.
Step 2: Going to the Dealership
Once you’re at the dealership, consider telling them a few things. One, you will not be purchasing the car today. Two, ask what their bottom line cash price is for the car you want. Lastly, don’t tell them about any trades up front as this can skew the price of the car you’re looking to buy.
Step 3: Reviewing Your Offers
After the dealership has given you their bottom line price you may want to go home and do some research on www.nada.com to see the true value of the car. If you’re not happy with the offer they’ve given you, negotiate. Don’t make the purchase until you feel good about it.
Once you’ve made your decision as to whether or not this is the right deal for you, either apply for and get a loan from a financial institution or head back to the dealer and see what kind of loans they have to offer.
Step 4: Financing the Purchase
Now that you’ve selected the car you want and you have agreed to a price, it is time to finance the vehicle.
4a: It is always a good idea to have some money to put down, even if it is just $1,000 or $2,000. Putting money down is important because it will lower the amount of money that you need to borrow (in and turn, the amount of interest you will need to pay).
4b: Next you are going to want to check around to your local financial institutions to see what kind of auto loan rates and terms you would qualify for.
Rate and loan term can depend on the age of the car, mileage and your credit. It is a great idea to get pre-qualified for a loan before you go back to the dealership – this will give you more bargaining power.
4c: Most dealerships offer financing; their rates will most likely be higher than what you are offered from a regular financial institution. Some dealers will offer 0% financing – which sounds like a great deal – but before accepting a promotion at face value, do the math. Are other costs being added in? How much money will you end up paying in the end?
Spending Less at the Dealership
Remember these pointers when searching for your car:
- Don’t be afraid to negotiate! A dealership wants to sell a car just as much if not more than you want to buy a car. There is always room for negotiation.
- Don’t be afraid to walk away. You may be disappointed at first but if you’re not getting the right deal for you, it’s worth it to find another car at another dealership.
- When considering special offers and loans at the dealership, remember these words of wisdom: if it seems too good to be true, it probably is! Make sure that you fully understand the terms of any agreement before you sign it. Don’t let yourself be rushed into accepting financing that isn’t the best you could have gotten.
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