smart car shopping and buying tips

smiling family taking a selfie on a car

There are ways to make car shopping and buying easier on you — and your wallet. Before you buy or lease a new or used car, read these tips.

If you decide to get a car loan, be sure to shop for your loan. In fact, it makes sense to shop for your loan before you shop for your car.

Research a number of financing sources including banks and credit unions. Some car dealers also offer financing. Compare all loan aspects, including the interest rates and term lengths they offer. Find out what your monthly payment would be for different loan amounts.

Consider asking for pre-approval of your loan. If you’re pre-approved, it means you can shop for a car in your price range with the confidence that you’ll get the loan you need.

Consider the kind of vehicle that will meet your transportation needs. Be sure to consider safety records, gas mileage, maintenance, and insurance costs.

Search consumer and auto magazines and online publications to research the possibilities. Look at ratings and evaluations by automotive professionals and road tests, especially those performed over thousands of miles to evaluate a car’s gas mileage, durability, and maintenance issues.

Research safety records.

Narrow your choices to a few specific cars.

Check with your insurance agent to compare the cost of insuring each car.

Based on your research, compare the total costs of each car you’re considering. Does the amount fit your budget?

An increasing number of people are buying cars online.  Even if you shop online, you may want to visit local dealerships to see the cars first-hand, take test drives, ask questions, and evaluate their parts and service departments.

Check with your financial institution to see if they offer a car buying service. This service can help you find the car you’re looking for in your price range.

Some dealers have adopted a “one-price” policy on new cars, meaning that every car is offered at a fixed price with no negotiating between the dealership and the customer. While this system may make your transaction faster and easier, keep in mind that the price you pay might be higher than what you might pay by negotiating.

As you comparison shop, retain some flexibility about make, model, year and color. You may find a car you like better and/or a better deal.

Narrow your choice. Decide on specifics such as the color and options you want. Remember to take resale value into account. When it comes time to sell your car, you will want a color and options that appeal to prospective buyers.

Research the dealer invoice for the car you’re interested in. This will give you a rough idea of how much of a discount a dealer can provide. Some add-ons may be unnecessary and can be overpriced.

Take advantage of the test drive. Walk around the car. Listen to the car as you drive it. Check what you can but be sure to have it inspected by a certified mechanic and point out any flaws or problems with the car to the seller before you agree to buy it.

Consider shopping during traditionally slow sales periods, such as late December and late summer/early fall.

Be a patient and persistent shopper. Avoid being more anxious to buy than the seller is to sell.

Decide on your top price, a number you feel is fair for the vehicle, with monthly payments you can afford.

Start negotiations by focusing on the price of the car, not on monthly payments, insurance, a trade-in, or extras.

Avoid being the first person to mention a specific price. Ideally begin your negotiation at least 20% below what you’re willing to pay. Remember that the dealer needs to make a profit and is likely to make a high counteroffer.

Know your “cash on hand.” If you have can write a substantial check on the spot it may get the seller’s attention and strengthen your ability to negotiate the price.

If you are planning to trade-in a car, there are lots of things to consider. It might be easier to turn over the car instead of trying to sell it on your own but you will likely not get as much money for it. When you buy from a dealer, you can use the trade-in value to help with your down payment amount. You may be able to negotiate with the dealer too.

Know the invoice price, fair market price, and the Manufacturer Suggested Retail Price. The invoice price is the actual cost that the dealer paid for the car. The MSRP is the sticker price or the suggested price to sell the car. The fair market price is what other people have paid for the car.

Be prepared to spend at least a few hours negotiating.

Maintain your composure. Don’t argue. You can be firm, but be polite. This attitude will show the seller that you’re a person who cannot be intimidated, rushed, pushed, or panicked into a decision.

Don’t let the seller know exactly what you’re thinking. If you’re too enthusiastic about a specific car, you’re less likely to get the best price. Don’t divulge the top amount you’re willing to pay or the monthly payment you can afford.

If the seller pressures you, simply smile and say something such as: “You have my offer. I appreciate your time and effort, but this is my budget limit.”

Beware of dealers who bring another salesperson or manager into the negotiation to wear you down. Reach a deal with the original salesperson or walk out.

Be ready to walk away. Chances are the seller will make one last attempt to find a price you can agree on.

Leave on good terms. Even if you don’t buy today, you might be back again later.

Review the contract carefully. Make sure it reflects everything that was agreed on.

Beware of any unnecessary or overpriced extras the dealer may attempt to tack on. Don’t let your guard down until you leave the dealership.

Don’t pay for “dealer prep”! It’s already been paid for by the manufacturer.

Think carefully before you agree to an extended warranty. Some dealers may imply that banks require extra warranty protection for longer financing terms, but that may not be the case. You may not need one, or may be able to get a better deal later.

Be prepared to cancel the deal. If something doesn’t feel right, or you have a “gut feeling” that your purchase will be a mistake: walk away! Remember, you can always find another car.


completing the purchase

When you buy a car, you sign several forms and contracts. Be sure to read all documents carefully. Never sign a contract with any blank spaces.

Depending on laws and policies in your state, you may receive the sales contract or bill of sale. You may get a form that certifies the number of miles on the car (Verification of Odometer Reading) and a vehicle inspection report.

You will have to pay fees to your state department of motor vehicles. These fees are for the title, registration, and sales tax. You may also receive tags for the car so you can buy and drive right off the lot. If you buy from an individual seller, you will have to go to the department of motor vehicles to take care of these details.

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