Buying a new car is a very stressful purchase.
Buying a new car is the second most expensive
purchase many consumers make, after the purchase
of their home.
Buying Your New Car
Before you step into a dealer's showroom, it
helps to know what car model and options you want
and how much you are willing to spend. That way,
you are less likely to feel pressured into making
a hasty or expensive decision and more likely
to get a better deal. To help you shop, you may
want to consider the following suggestions:
- Check the internet for new automobile features
and automobile prices. Internet websites will
provide information on the dealer's costs for
specific models and options.
- Shop around to get the best possible price
by comparing models and prices at dealer showrooms.
You also may want to contact car buying services
and broker buying services and make comparisons
there.
- Plan to negotiate on price. Dealers may be
willing to bargain on their profit margin, which
is generally between 15 to 20%. This is usually
the difference between the manufacturer's suggested
retail price and the invoice price.
- Consider ordering your new car if you do
not see the car you want on the dealer's lot.
This usually involves a delay, but cars on the
lot frequently have options you do not want
-- which add considerably to the cost.
Checklist for Buying a New Car
You are likely to get a better deal on a car
if you know beforehand exactly what you are looking
for and what you are willing to spend. Therefore,
before signing a sales contract with a car dealer,
you may want to:
- Decide which car model and specific options
you want.
- Find out the invoice price (the lowest price)of
the model and each option you want.
- Decide how much you are willing to pay the
dealer, if anything, above the invoice price.
- Compare final sales prices with other dealers
and buying services.
- Compare financing costs from various sources,
such as credit unions and savings and loans
institutions, with those of car dealers.
- Find out the value of your old car, independent
of a dealer's trade-in offer.
- Decide if you need an optional service contract
or credit insurance.
Trading in Your Old Car
After getting your new car for the best possible
price, only then discuss the possibility of a
trade-in. First, however, find out the value of
your old car. You may want to check the library
for references and periodicals that can tell you
how much your car is worth. This information may
help you get a better overall price from the dealer.
Remember, too, that though it may take longer,
you generally will get more money by selling the
car yourself.
Financing Your New Car
If you decide to finance your car, you have
the option of checking the dealer's rate against
banks, credit unions, savings and loans institutions,
and other loan companies. Because interest rates
vary, shop around for the best deal and compare
the annual percentage rates (APR).
Sometimes, dealers offer very low
financing rates for specific cars or models, but
may not be willing to negotiate on the price of
these cars. In addition, they may require you
to make a large down payment to qualify for these
special interest rates. With these conditions,
you may find that it is sometimes more affordable
to pay higher financing charges on a car that
is lower in price or to purchase a car that requires
a smaller down payment.
Some dealers and lenders may ask you to buy
credit insurance, which pays off your loan if
you should die or become disabled. Before you
add this cost, you may want to consider the benefits
available from existing policies you may have.
Remember, buying credit insurance is not required
for a loan. |
