A new car is likely one of the largest investments people ever make. Naturally, you want to find the best deal, without paying for dealer markups and add-ons. There are a few other things to consider beforehand, though.
Here are five ways to avoid paying too much for your next new car…
1. Ask Yourself Some Tough Questions Before Deciding to Buy
The first brutal question you should ask yourself is this: Can I really afford a new car?
While the feeling of driving off the lot in your brand new “whip” is amazing, the feeling of being shackled by debt is not. Debt is a huge problem in America, and much of it is related to car payments.
Another question is, “Why do I want to buy a new car?
Does the idea of a new car fill you with an excitement you can’t really explain? You might be making an emotional decision, and not a rational one. Would a used car do? Why not?
2. Determining Your Realistic Budget
Okay, if you’re still interested in buying a new car, it’s crucial to set your realistic budget. This is the number you’re not willing to exceed, despite any dealer smooth-talking.
You should (almost) never be paying more than 20% of your monthly income on a car payment. If you have special circumstances, such as paid-for housing, this number can go a little higher, but not by much.
Create a realistic budget based on what you make each month, as well as what you spend on everything you need. If the car still fits in, great! Keep moving on to the next step.
3. Understanding Costs and Risks Associated with a New Car
Your desired car’s “sticker price” is far from the end of what it will cost you in the long run. Even if you have a car to trade in, chances are that it’s not going to completely pay for your new vehicle.
Even then, there’s gas, repairs, and other costs to consider. Before you buy, you should always do an Auto Insurance Quotes Comparison for the car you want, and factor this into your budget.
Since you’ll likely be financing the car, it’s crucial to understand exactly what you’re locking yourself into. Shop around for the best loan rates, and understand the total figure you’ll pay for the car over the coming years.
4. Preventative Medicine
It’s always a good idea to keep your credit in good order–this will keep you from needing a co-signer when you finance your new car. Your credit score will also be the biggest determining factor in your interest rate and loan terms.
If your credit isn’t in the best shape right now, it might pay to wait at least a few months before buying a new car.
5. Negotiating a New Car Price
Many people are uncomfortable haggling over the price of a new car, but it doesn’t need to be as complicated as many people make it seem. Here are two good “rules of thumb” once you’ve found the dealership where you plan to buy your new car:
- Have an established “opening bid,” based on researching what the dealership paid for the car, or what internet-based research has told you is a fair price for the vehicle in question.
- Collect competing bids from car-buying websites, and potentially other local dealerships.
These two pieces of information will let the dealer know you’ve done your homework, and are not willing to settle for less. While they might still try to sell you add-ons, etc., this is the best place to start when buying a new car.
Best of luck with your new car purchase. Remember: always be budget-conscious and well-informed, and you won’t go wrong!
