Are you looking for a new car?
Before you walk into a car dealer’s lot and get screws hammered into you by the salespersons, do some thorough research.
You could go online and find reviews on different types of cars or ask your friends and family members who might be conversant with the auto world. Their past experiences with different kinds of vehicles can be very helpful.
There are several reasons you shouldn’t rush into buying a car. You might get ripped off easily or end up buying something that you don’t like. Nonetheless, here are some of the top things to consider first:
4 Things to Consider Before Buying a New Car
1. Your Budget
You have decided that you need a new car, and you are asking yourself, “What car should I buy? What car is right for me?”
Before you even think of answering any of those two questions, determine how much you are willing to spend and stick to your budget.
It is recommended to limit your car budget to around 20% of your monthly expenditure. Your budget should also be inclusive of car insurance and sales taxes.
2. Type of Financing
Before you get behind the wheel for that exciting test drive, make sure you have made up your mind about what type of financing you are going to use for the car purchase.
If you decide to go for a car loan or a lease, be sure to make the necessary arrangements beforehand.
It is advisable that you handle your own financing. Don’t let the car dealers do it for you.
Because, in most cases, they will inflate your rates. What most people do not know is that the finance department is the biggest source of profit for many car dealerships.
Car dealers negotiate with banks to obtain the best possible rates. However, these rates are not what they indicate on your contract.
For instance, a dealer might secure a car loan at 4.9 % APR. But what is reflected in your contract is a whopping 5.9%. The extra markup goes to the dealer as profits.
Despite what the salespeople might lead you to believe, banks and credit unions often offer better rates than those offered at the dealerships.
To save some extra money, be sure to compare your bank or credit union’s rates with other local lenders and choose the most optimal and favorable terms.
Interestingly, car prices are influenced by seasons.
For instance, summer is not the best time to buy a car that has a convertible capability. Why? Supply and demand, simple as that! During the summer, convertibles fly out of the car dealer’s lot. This is especially true for used cars.
To get a good deal, you should go against the current demand and supply forces. This means that when it’s all cold and freezing outside, that’s the best time to land a great deal on that convertible car you have always wanted.
The same laws of supply and demand apply to buying new cars. For example, if fuel prices increase significantly, fuel-efficient brands like Toyota would be streaming with customers who would buy every single Prius available at full price.
Again, at such a time, it would be a good idea to go against demand. While everyone is lining up for a Toyota, you should do the smart thing – go SUV shopping.
4. The Car’s Invoice Price
Once you have decided which car to buy, you should find out the invoice price for that particular brand and model.
The invoice price is the price paid by the dealer to the automobile’s manufacturer. Usually, dealers inflate this price by thousands of dollars so that they can make a hefty profit for every car they sell.
Quoting the invoice price when negotiating at the dealer’s lot will show the dealer that you not only know what you are looking for but also its specific price. Once a dealer sees that you are well-informed, they are less likely to quote inflated prices.
Cheap new cars are hard to come by. However, incorporating the invoice prices in your negotiations will see you own the cheapest new car of your desired brand and model easily.
Car Shopping Has Never Been This Easy!
Shopping for a car is always a daunting process – you may end up buying an old model for exuberant prices. However, this car shopping guide for should help you glide through the process and land a great deal. It’s all about having the right facts and information about what you want.
Happy car shopping!