Did your car breakdown? Did it get repossess because you are between jobs? Or you simply just want an upgrade? No matter the reason, car buying can be overwhelming when you're not knowledgeable about the process. There's nothing worse than buying a car and realizing you over paid.
Walking into a dealership without doing some homework first will be an epic fail. This journey is NOT for the impatient individual. Your time is money, therefore, putting in the time to do some research beforehand will save you hundreds (if not thousands) of dollars. That dream car is out there and can be affordable, if you follow these 4 things before going to the dealer.
Online shopping in this case is your best friend. The dealerships need to bring in traffic and they do so by offering discounted prices to the cyber stalker (correction, shopper)! Compared to the sticker price, you may find the online price to be a few hundred or even two-thousand dollars less. Knowing this piece of information alone just saved you some money. So if you happen to go to the dealer first. Step aside and go online to see if they listed the vehicle at a lower price. The most popular sites are Autotrader.com; Cars.com; Edmunds.com; Carfax.com; Trucar.com and many others. Select the one(s) that tickles your fancy.
After finding various cars online, you should now generate a list of vehicles that peek your interest. It's almost like window shopping but you will end up making a purchase. The things you put on this list is pretty basic. It should include:
- Make and Model
- Dealer's price
- Last four digits of the VIN (vehicle identification number)
- Carfax (recommended if Pre-Own Certified that it had 1 owner, no accidents and up-to-date on maintenance)
Now that you know what the dealership price their vehicle for. It's your job to find out what the fair market value is for the cars on your chart. This is where most consumers go wrong. When you buy a car it depreciates in value. So imagine that you purchase it today, drive off the lot, get into an accident and it's a total loss. The auto insurance company will write a check for the car's value on the market and not for the amount you spent or owe the finance company.
How do I find the value before buying? you ask. There are several value sharing resources, one being Kelly Blue Book (KBB). Fill in all the required information from your wish list to find the MSRP (value) of a new/used car. KBB will present a price range. This is where you want to fall in between on your final Out-the-Door purchase price (aka OTD). Going too far above that range will cause you to owe more than it's worth (a term called upside down). NOT a good thing.... Avoid this from happening as much as possible. If you have to go over, at least stay under two-thousand dollars. That overage can be paid down within two years (as long as there are no late payments).
Let's be honest, money talks. None of this matters, if you can't afford the car. Unless you are making a cash purchase, then financing is the only option. Go to your local bank for pre-approval. Highly recommend using a credit union, with good credit, they offer the best interest rates or APR. Assume that all goes well... Put in the pre-approved APR, estimated OTD price and the term of the loan into a car financing calculator to obtain a monthly payment approximation. At this time, weed out the cars on your wish list with a high monthly payment and focus on going to see the vehicles that meet your budget.
Remember, you are the one paying the bill. So don't let the dealership drive you into debt. Be realistic on what you can truly afford and you will love your purchase for years to come.
What happens at the dealer and how you negotiate the best price is a whole other story!!!!