Let’s be honest, car buying is not the most exciting time in our lives! We’ve all dreaded heading to the dealership to buy a new car for one reason or another. However, knowing how to spot a good deal and doing your research can help you make a sound financial decision.
Know your buying power
Knowing your buying power means that you have reviewed your budget and know how much money you can comfortably pay for your new car. Consider any new life changes that may come around in the next few years and plan for them. List out all of your bills and monthly expenses to determine your budget and don’t allow yourself to get pressured into a $350 payment, if you can only afford $250/month.
Know your vehicle value before going to the dealership
If you plan to trade-in a used vehicle, you should check the value through NADA or Kelley Blue Book ahead of time. Dealerships will generally try to offer the trade-in value of your vehicle, when in reality, the retail value could also be used. Sometimes these numbers are close in range, but there are times when these values can differ greatly and affect the amount of money rolled into your new loan. If you aren’t sure, call your local financial institution to see how much your car is worth.
Beware of expensive add-ons
There are many great reasons to add GAP or service contracts to your new auto loan, but know when a the price is too high. If you can afford to pay for these out-of-pocket, doing so could help ensure you don’t become upside down on your new set of wheels. These add-ons can range in price, but be sure to know the average for your state before arriving. If you have already purchased a new car, but passed on a vehicle service contract, you may still be eligible.
Buy the right car
Some cars depreciate faster than others, so be sure to look at what is under the hood and not just the bells and whistles. Many dealerships will try to get the oldest cars off the lot by offering discount prices, which can be great for consumers, if they understand what they are buying. Consider potential cost for repairs, family or work needs, and gas mileage, just to name a few. Every car is not right for every person.
Commission is incentive enough to sell you a car
Sure, we all want to think that our salesman is our new best friend, but before you invite them for dinner, remember that they are making a commission on your purchase. There are plenty of trustworthy and friendly salesmen out there, but do not forget that they are all sales agents. They make their money by selling you a product whether it works for you or not. Look for someone friendly who also gives you honest feedback on cars that may interest you.
Check out the document fee on your contract
Document fees are real and completely normal; however, they shouldn’t be higher than $200-300 in most states. If you got a ‘great deal’, be sure they didn’t hide a cost in the document fee section of your contract.
Salesmen are not car experts
Do not expect for all salesmen to provide thorough knowledge on each car make and model. It is important for you to know trusted brands, safety features, and car part functions. You can count on your salesman to focus on the heated seats, sunroof, and leather seats. They aren’t so focused on telling you the engine life expectancy or when the tires were replaced.
Pay attention to the interest rate
Dealerships like to sell you on the car payments and not on the interest rate. You absolutely do not want to be upside down on your car within a year due to high interest rates. This means that the value of your vehicle is depreciating faster than you can pay it off. Check your credit score and shop around for a fair interest rate before signing a new contract!
If a dealership has taken advantage of you by offering you a high interest rate, contact rateGenius to see if we can save you money on your monthly payments. Together we can help you gain financial control of your life!