Buying a new car can be exciting, and everyone certainly loves the feel and the smell of a brand new car. But a new vehicle, including car insurance, is a major investment, and one that will likely affect your budget for years to come. So it is important to approach the purchase of a new car or truck with care, and with a clear head. Dealers often have the upper hand in negotiations, and buyers can often feel that they have little choice but to pay the asking price on the vehicle they desire. But that doesn’t need to be the case. The following tips will help put you in the driving seat for the purchase of your next new vehicle. These simple tips will show you how to beat the dealership at its own game, and save money on the purchase of a new car.
Research Your Car Loan Before You Visit a Dealership
Few people can afford to buy a new car out of pocket, and nearly everyone will need some kind of car loan. Before you head to the dealership to test drive a few models, do some research on your car loan options. Look to banks and credit unions for car loan quotes, and find the one that best suits your budget and expected financial circumstances. Dealer financing is often seen as convenient, but typically costs the buyer more in the long run than securing a loan through a bank or credit union. Remember, when a dealership finances your loan they will be making money off of the back end of the loan, and that money comes out of your pocket.
Know the Value of Your Trade-In
Research the resale ad trade-in value of your old vehicle using Kelley Blue Book. While trading in your old car is usually easier and more convenient, you can sometimes realize a better price by selling it yourself and using that money as a down payment on your new car. However, when comparing resale value versus trade-in value, be sure to figure in your tax responsibilities on a sale. If you do decide to trade in your old vehicle, wait to discuss the trade-in value until after you have negotiated a final price for your new vehicle.
Beware of Additional Warranties
Most dealerships offer add-on warranties on the sale of their new cars and trucks. Always read the fine print on the terms of the warranty being offered, and consider whether or not it offers real value for the price. The cost of these additional warranties can easily add more than $2000 to the total cost of your vehicle, and the protection they offer may not be worth the investment. If you do decide to purchase an additional warranty, pay for it separately so that it doesn’t increase your loan or add to your monthly payments.
Negotiate the Total Cost, Not the Monthly Payments
Many car dealers will try to woo prospective buyers by showing them just how low their monthly payments can be. Remember, the lower your monthly payment, the longer the life of your car loan. You may be “saving” a few dollars every month, but in the long run you will be paying much more in fees and accumulated interest. When negotiating the cost of a new vehicle, always concentrate on the total, out the door, price.
Car dealers do get something of a bad rep, and not all dealerships are out to take advantage of their customers. But the purchase of a new car or truck is a major investment, and it is important that buyers understand how to negotiate the best price possible for their vehicle. These few tips will help you get the car of your dreams at a price you can afford.
