Are you planning to buy your very first car? Or maybe it is time to get rid of your old one and upgrade to a newer model. We have compiled a list of some tips everyone should know when buying a car. Interested? Keep reading.
All about the money.
Think about your budget. I know you probably have a dream car in your mind that you always wanted to buy, but you have to make sure you can afford to take it home.
A rule of thumb is to not spend more that 25% of your monthly household income for all the cars you own. These 25% should not only include the monthly car loan but all other vehicle cost, which I will cover in a bit. There are also a lot of websites where you can calculate the monthly cost of your car and keep track of your finances.
The most important thing after you have determined your budget is to stick to it, don’t go spending to much on a car just because the salesman made is sound good.
Have a plan for the financing
Financing at the dealership is most likely not the best option to choose. Car dealers don’t just want to sell you the car but also the loan, since they usually receive a commission for it. So, check with your bank beforehand what a credit would cost you and compare different rates to find the best solution for you.
Asses your ownership costs. The costs of owning a car are more than just the price of the car and go way above the monthly payments you have to make for the loan. Here is a list of common factors that increase your monthly costs:
Sure, you might have found a great deal for a used car and you are tempted to buy it. But you should also think about the future. Every car reaches a point in its live where repair and maintenance costs suddenly rise sharply. Make sure you also account for those so you don’t get in trouble after a year or two.
Do your research.
New, used or leasing? This question is really important because it will determine the type of cars you are looking for and the search channels you are going to use. Each of these options has its own pros and cons.
You can find really good deal for used cars nowadays and save a lot of money, however you will have to pay higher interest rates and the warranty period will be shorter. A new cat will come with lower interest rates and a longer warranty, but for the same amount of money as for the used car it will have fewer features.
If you lease a car you can get a more upscale car for your money, but you won’t own the car outright and you have to follow the leasing terms.
Limit your choices. After you have decided on what type of car you want to buy, you can start looking for those that fit your criteria. Try looking on online platforms or in your local newspapers, there are tons of offers, you just have to find the right one for you. It might be best to limit your choices and make a list with your favourite ones. Additionally, make a list of things that your car needs to have for you to buy it and some things that would be nice to have but are not really necessary.
Compare Prices. Your research should also include the market prices and invoice prices for the cars you want to buy, don’t just assume that your local car dealer will offer the best price. Having a general idea of the current market price can give you a great start for negotiations.
Many car manufacturers offer discounts to students, military members and other social groups and these discounts can be combined with the cash back rebates from the dealer. Just make sure the discounts are deducted after you agreed on a price.
Trade in value. If you have a trade-in don’t wait for the car dealer to tell you what it is worth. Research the current value of your old car beforehand, to make sure you get a reasonable amount of money for it.
The Dealers. Try to find different dealers in your area, ask friends and family members for their experience, maybe they know someone and can give you a recommendation. Also try to look for reviews online and check what previous customers have to say about the dealer.
Take your time.
Shop around and compare. Don’t buy the first car you see, take your time and look around. Exploring all your options will ensure that you don’t regret your decision afterwards. Don’t rush it, buying a car is not a small investment, so make sure you have had enough time to compare all the options.
Ask questions. No question you have is too stupid or insignificant to ask it. Keep in mind that you are looking for car that you are going to use for several years, so don’t settle for anything less and speak up!
Check the Cars.
Take the car for a test drive. You really want to make sure you spend enough time testing the car, to ensure you like the driving experience. Spend some time adjusting the seats, experiment with the controls and make sure that there is enough space for your typical cargo.
You should also check for any visible sign of damage. Check if all doors close flush against the car. Make sure the hood and trunk close perfectly, any misalignment could be a sign for previous damage. Also check for any dents and scratches, they might not be a deal breaker but it is better to find them before you close the deal.
Professional inspection. Taking a car for a test drive is always a good idea, but sometimes it is not enough to get a clear picture of the car. Think about taking the car to a mechanic and have them do a professional inspection. This might cost a little bit but could save you thousands of dollar on repairs afterwards. If the car dealer tries to prevent you from getting a professional inspection, chances are that he is trying to cover up some issues.
Take a friend. The best thing you can do is to take someone with you when you go to the dealer. It is always better to have another opinion, especially if this person has some knowledge about cars and can prevent you from making a mistake.
Ask questions. Again, it is really important to ask question in order to find the best deal. Here is a list of some questions you should ask when buying a car, especially a used one.
When did you buy the car?
Why are you selling it?
Can I see the log book?
Has this car ever been crashed or damaged?
Has there been any mechanical work done to it?
What is the milage?
When was the last full service carried out?
Closing the deal
Time for Negotiations. When you start negotiation with the dealer keep all your previous research in mind so you know whether you are offered a fair price or not. It is also better to discuss the price for the new car and the trade in value of your old car separately. Once you have reached an agreement, be prepared to say “No”. No to all those fancy extras they offer you, you can do some research for add-ons that interest you later on and contact the dealership again to negotiate a fair price.
Know your rights. When you receive the contract make sure to double check the conditions and that everything you have agreed on verbally is included in the contract. Also make sure that the contract does not include unnecessary fees.
I hope these tips are useful and will help you make a better decision when buying your next car. Let us know in the comments below what you wish you would have known before your first car purchase. Or just tell us about your experiences.
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