Buying a New Car: What You Need to Know

Buying a new car should be one of the most pleasurable experiences of our lives since it is certainly one of the most expensive purchases.  However, that seems to rarely be the case.  With stories of being ripped off, cheated, pressured, and facing bait and switch schemes and good guy-bad guy routines, consumers need to be on their toes and in best form.   What do we need, to make this experience pleasurable and profitable to us as consumers? 

  1. You need to be armed with knowledge about the product you want to buy, PRIOR TO VISITING A DEALER’S LOT.  This includes items such as options, warranties, rebates, invoice price, etc.  A really good source for such information is Edmonds.com.  Do not set foot on a dealer’s lot during business hours before you have completed this first item. 
  2. You need to arrange your financing PRIOR TO VISITING THE DEALER’S LOT.  This will usually result in a better financing rate for your new vehicle.  After collecting all of your vehicle information, go to your local car dealer’s lot after hours, when you will not be approached by aggressive sales persons.  This will give you the opportunity to assess their inventory and to locate the make and model of the car you want to purchase.  If you make a record of the information from the Manufacturer’s Suggested Retail Price window sticker, you can return home and review all of the car’s options on your computer.   
  3. If you have a car to trade in, don’t.  It is that simple.  DO NOT TRADE IN YOUR CAR.  You will financially do much better if you sell your car privately.  Then you can approach the local dealer with a cash offer, no trade-in.  Your willingness to take a little time and effort to sell you car, rather than trading your car, will save you several thousand dollars.  Their are numerous methods of selling your car, depending on its age and condition.  Your local paper has a classified auto section for sellers, and on-line auto trader publications have a wide audience of prospective buyers for your vehicle should you utilize their service.  If your car is not worth much, consider the tax benefits of donating the vehicle to an organization qualifying for a tax deduction.
  4. Know what the true market value of the car really is in your area.  That is to say, “What are people in my area paying for the vehicle.”  Don’t be shocked to find out that if you want to buy a “hot or popular selling vehicle,” the true market value may exceed the manufacturer’s suggested retail price.  Although this is rare, it can happen in select markets with specific brands.  However, in most cases, what other people are paying is an amount somewhere between the actual “invoice price of the vehicle”(what the dealer pays) and the “manufacturer’s suggested retail price.”
  5. After you make your deal on the car, you will probably meet with the finance manager.  Keep in mind this really is a salesperson of financial products.  They will try to sell you everything from extended warranties to life insurance.  DO NOT BUY ANY OF THESE SERVICES OR PRODUCTS!  They can significantly increase your monthly payment for the entire life of the loan. 

If you commit to following these five simple steps your car buying experience will be pleasurable and profitable!

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