Buying a car is one of the biggest purchases you’ll make in your lifetime, second to buying a house. Most middle-income families are finding themselves unable to afford a new car. However, the rebounding economy has prompted many to hang on to used cars, meaning it’s still a seller’s market. Whether you’re buying a new or used car, review these tips to make sure you make the best choice.
1. Prepare a Budget
Know how much car you can afford, regardless of whether you plan to pay cash or finance. If you’re paying for the car upfront, use your cash-in-hand advantage to get a lower price, even if you’re buying directly from the car’s owner. For financing, shop around for the best rate before setting foot on the dealership lot. Watch for special offers on car financing to lock in a low-interest rate.
2. Do Your Research
Don’t start car shopping unarmed. Check out car values, which vary depending on the car’s year, condition, features, and who’s selling it (a dealer or owner). Videos by True Car help you understand whether dealers’ promotions and sales give you a pricing edge. Don’t forget about asking friends and families about cars they’ve owned. Post a query on your Facebook page or Twitter and you’re likely to get a slew of honest opinions from those you know and trust.
3. Evaluate the Total Cost
Image via Flickr by CloteePridgenAllochuku
Getting an affordable vehicle means you have to consider more than just the upfront costs or monthly payments. Don’t forget to calculate the costs of insurance, which varies depending on where you live, how far you drive to work, and the kind of vehicle you own.
Also, figure in the cost of gas based on the car’s miles per gallon rating (MPG). By including these costs in your purchase decision, you’re giving yourself an accurate picture of the car’s impact to your bank account. A cheap sticker price might backfire if the fuel efficiency on a car is low and you’re driving long distances regularly.
4. Avoid Leasing
In most cases, leases do not end up being a good deal for anyone except the dealership. At the end of the lease, you have no equity in the car because you’ve essentially been renting it. If at all possible, go for purchasing instead of leasing.
5. Shop at Dealerships Strategically
Image via Flickr by The Consumerist
Salespeople looking to meet their monthly quota might have more motivation to wheel and deal a few days before the month’s end. If you want to take advantage of this possibility, have the car and the price you want in mind.
Additionally, many salespeople try to pressure you to buy, but in most cases, the price quoted today is still good tomorrow. If you need time to mull it over, be willing to walk away to crunch the numbers on your own time and turf.
Buying a new or used car requires you to do your homework so you can get a good deal. Look for helpful tools online to help you prepare to target a reasonable price and negotiate.