Do you (or someone you know) want to avoid paying more than you have to when buying a car? I do!
If you are in the market for a new car now or in the near future, here are 5 Car Buying Tips to help save money when shopping for your next car.
KNOW YOUR BUDGET
The first and most important tip is to know "How much you can afford!" Do NOT let a car dealer's finance department or bank tell you how much you can afford. Both essentially want to ensure that you borrow as much as possible so they can make more money off of you. The more they can make you believe that you can afford, the more the car dealership will make on the car and the more loan interest income the bank will earn on your loan.
GET PRE-QUALIFIED
The best way to avoid unpleasant surprises; like, not qualifying for the amount wanted, needing a cosigner or getting a ridiculously high interest rate, is to get Pre-Qualified or Pre-Approved for an auto loan. Go to your bank or credit union to apply for the auto loan. Tell them the payment amount you can afford to pay so they can determine the total loan amount based on the interest rate and term you qualify for based on your credit. Remember, the Higher your Credit Score, the Lower your interest rate and the More loan amount you will qualify for. Adversely, the Lower your Credit Score, the Higher your interest rate and the Less loan amount you may qualify for or a down payment will be required.
RESEARCH BEFORE YOU CAR SHOP
Now it's time to have some fun going online to search for a vehicle in your price range. Dealers with No Haggle Deals are really good because they usually sell their vehicles below NADA or KBB value. Next go to NADA or KBB website to find out and print the Trade In and Retail Values to take when you go shopping.
TAKE A MAN WITH YOU
Take your husband, boyfriend, father, brother, uncle, male coworker or that dude from down the street. Even if he knows nothing about cars or negotiating, take a man with you when you go car shopping. If the sales person begins speaking directly to the man, play along and coach your escort in what to say or not say. You are in control of the transaction; he is just the figure head. Unfortunately, women are sometimes taken advantage of during the car sales process.
NEGOTIATE BEFORE THE TEST DRIVE
Sometimes we absolutely lose our mind after we get intoxicated by that "New Car" smell during the test drive. My advice is to negotiate before you test drive to have a clear mind during the negotiation process.
Here are a few things to do when you get to the car dealer:
- Tell the sales person that you are doing a cash purchase. (Because you have already been pre-approved!)
- Do NOT give your personal information or allow them to run your credit. (Again, you are already pre-approved.)
- Tell the sales person what type of car and the price you are looking for.
- Ask if the car has any rebates or if the dealership has any incentives.
- Ask to see the buyers order with options to see the breakdown of all expenses and fees to help you with negotiating.
Use your NADA or KBB value to negotiate the price as close to the Trade In value as possible. Negotiating the price as close to the Trade In value will give you equity in your car, as well as help you when you decide to trade in the car later.
You may not be able to get the car of your dreams today, but by getting a reasonably priced vehicle within your budget, you will be able to save money and get that dream car in your near future. Happy Shopping!
Financially True,
