Next to purchasing a home, buying a new car is one of the biggest investments many people make. Since car dealers get paid on commission, simply setting foot on the lot can mean facing a glut of salespeople hoping to pocket as much money as possible. No wonder many people find heading to the dealership stressful.
Buying a new or used vehicle doesn't need to mean making spreadsheets and pie charts galore before reaching a purchase decision. However, it does mean taking the due diligence to research prices, automotive features and consumer reports before heading to the nearest lot. Follow these tips to make car shopping less of a headache and more like a fun game of barter.
1. Hit the Books
Whether trading in a vehicle or not, research prices well before heading off to the dealership. Those with a trade-in can assure themselves of their current car's value, which gives them a decided edge in negotiations. Those looking to purchase a used vehicle likewise will know when a salesperson cites a sticker price far out of line with the average.
Fortunately, a host of websites now allow users to value different vehicles for free. These values differ slightly across sites, so researching more than one provides a clearer average price. This helps account for regional cost differences as well.
2. Get Financing First When Possible
Obtaining auto financing before heading to the lot benefits consumers in two ways: They know from the start how much vehicle they can afford, and they generally pay less than they would by going through dealer financing. In general, local credit unions offer the most competitive rates, although those with excellent credit can find great deals at bank branches, too.
3. Follow the 20/4/10 Rule
The 20/4/10 rule also helps consumers determine how much car they can truly afford. In general, try to save a down payment of 20 percent or more for the best interest rates. Select loan terms of four years or less and strive to make vehicle payments take up no more than 10 percent of annual net income.
4. Consider the Needs
Those in snowy locations or who live down long dirt roads may require a four-wheel drive vehicle if they hope to make it to the office despite inclement weather. Those with long daily commutes benefit from alternative fuel vehicles or smaller, more compact automobiles that guzzle less gas. Those with more than two children may gravitate toward minivans that allow the entire family to ride in comfort.
5. Phone a Friend
Many people hesitate to negotiate when purchasing a new vehicle out of fear they know too little to name an appropriate price. Those buying a used car may lack confidence in their ability to give the tires an authoritative-enough kick.
When buying new, consider taking a trusted friend to assist with the negotiations if overcoming the fear of bargaining seems akin to scaling Mount Everest without ropes or pickaxes. When buying used, ask to take the vehicle for an independent inspection by a trust auto mechanic before signing the purchase contract. Not all dealerships permit this, but those who refuse proper vehicle inspections may have something to hide.
6. Consider Extra Features Carefully
Sure, that audio system may pump up the bass like a nightclub DJ — but are shattered eardrums on trips to the grocery worth paying hundreds more over the life of the loan? Rear seats with built-in DVRs keep the little ones occupied on long drives, and that spoiler makes an otherwise boring sedan seem like a sweet race car. Does anyone truly need these amenities, though?
When on a tight vehicle budget, skip the extras at the dealership. Add amenities later on when money permits, like stereos and other ride bling sell for less at auto parts stores.
7. Time the Purchase Right
The rumors are true: Vehicles do sell for less at the end of the year. Automobile manufacturers often drop prices significantly at this time in order to prepare for the following year's launch.
Additionally, consider going car shopping at the end of the day, especially on Monday and Tuesday. Weekends see a glut of traffic, and dealers negotiate more harshly when they can sell the same vehicle to a higher bidder. Shopping at the end of the day means encountering salespeople ready to go home to their families, making haggling for a bargain far easier.
8. Practice Good Vehicle Maintenance
After purchasing the perfect vehicle, keep the retail value high by performing regular maintenance. Many dealerships require periodic oil changes and other preventive maintenance tasks lest buyers risk voiding the manufacturer warranty. Used vehicles need even more attention to routine mechanical care to keep them on the road.
Enjoy That Dream Ride
Buying a new car need not result in undue stress - just patience, due diligence, and sound financial sense. Enjoy driving off into the sunset in a shiny new ride at the right price.
Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.