Whether you’ve started a family, are looking for an upgrade, or have run the last mile on your first car, at some point in your life, you will be in the market for a new car. Lucky for you, there are four simple steps you can follow to ensure that you get the car you want without breaking the bank.
The first step is to narrow down your shopping list to one or two vehicles you are most interested in. This might be the most difficult step, especially since there are hundreds of new makes and models, with so many being so similar. This is the point where you need to sit down and identify your wants and needs in a new car. If you have kids, that might be a car roomy enough for them all. Maybe you’re more concerned about the aesthetics or performance? Or maybe the deal breaker is whether or not it can haul or tow heavy items. Whatever those make or break deal breakers are, it’s important to begin by identifying them. That narrows the field down from hundreds of cars to dozens, or possibly only a few, making the decision that much simpler. Once you’ve found a few that fit the bill, do side-by-side comparisons of each to see how they line up, especially in standard features, performance, safety and reliability. There are many useful tools out there can make this easier to do.
Once you’ve narrowed your list down to your dream car, the next step is calculating what you can afford. This can be a difficult step since there are many different aspects to calculating it. First, you need to determine how much your current car is worth, and whether you’ll decide to keep it, trade it in or sell it to a private party. All options have their benefits and should be considered. Next you’ll need to decide how much of a down payment you’ll be making and what you can reasonably afford as a monthly payment. One of the biggest mistakes new car owners make is misjudging what they can afford, which can lead to major issues down the road. It’s important to shop within your budget! The best thing you can do is determine the bottom-line price you can afford ahead of time and stick to that number. A great tool that can help is a car loan calculator that lets you enter different amounts for the interest rates, amount financed and down payment to give you your monthly payment.
Once you’ve done all your research into the car you’ve picked, what you need to determine is the right price for the car. One key to successful negotiation is collecting as much information as possible on the new vehicle. Arguably the most useful piece of information to have is the invoice price, which helps to determine the lowest a dealer can go while still making a gross profit on the sale. This can be an extremely helpful bargaining tool, but it isn’t always a guarantee for the best price. Sometimes, rebates and incentives reduce the price below invoice, and even with that, the mark-up over invoice usually is less than 10%. While this gives you some negotiating room from the MSRP, or manufacturer’s recommendation for pricing, it doesn’t always get you as low as you’d think. Where dealerships make most of their money comes from used cars and services offered. The market is a strong determining factor in price, so know that it can fluctuate based on popularity, supply and other factors changing. A few tips for beating the market include:
- Buying at the end of the month – dealers have sales quotas to meet
- Buying at the end of the year – some dealers clear out inventory for tax purposes
- Buying a model late in the year before the body-style changes
- Buying out-of-season vehicles, like convertibles during the winter
One of the final steps you’ll need to take is finding your financing. It’s incredibly important to do your research and come to the dealership prepared. While many dealers offer 0% financing deals, you may find yourself along with roughly two-thirds of other consumers with credit scores too low to qualify. Shopping for financing through your local bank or credit union ahead of time may not only give you that control of your financial situation, but also another bargaining chip to use in your negotiations. When you walk onto a lot with your financing in hand, you won’t face the same hurdles others do because you’ve done a majority of the work in advance. This also gives you the opportunity to assess your purchasing options against the dealer’s best offer, and make your decision from there. Whether you decide to go with the dealer’s financing or your own, being prepared can help you save a lot of money in interest over the life of your loan.
Buying a new car doesn’t need to be a stressful time, as long as you go through the process wisely. There are many ways to prepare yourself ahead of time to help you make the best decision for your wants and your wallet. Looking for budget help before buying a new car? Contact Apprisen to see how our certified counselors can help you create a budget and discuss finances.
To schedule an appointment call 1-800-355-2227 or visit our website https://www.apprisen.com to chat with a representative.