Mapping a Route to Your Next New Car Purchase
Sitting in a new car on the dealership lot, or taking it out for a test drive, can stir up all kinds of emotions. The showroom finish, a great sound system, supple leather seats and that new car smell form an intoxicating mix of sensations that can easily put you in a “buy now” frame of mind. But to make a purchase that best fits your wallet — and not just your impulses — it pays to do a little homework before heading out to the dealership. Proper preparation can help you avoid costly surprises and keep your inner car enthusiast from steering the decision-making process in a direction you can’t afford.
Whether you’re purchasing a car for the first time or you’ve been down this road many times before, here are tips to help ensure a smoother ride with this major purchase.
Understand New Tax Credits and Incentives
Always check current federal and state tax credit options. Incentives tied to certain types of vehicles, such as electric models or those manufactured in the U.S., can shift over time as policies and programs evolve.
It’s also a good idea to investigate dealer incentives, such as low- or no-interest financing, cash-back offers, deferred payments or manufacturer rebates that may help lower your overall costs.
Pre-arrange Financing
While dealerships usually offer financing, it can be helpful to get pre-approval for a loan through a bank or credit union. That way, you’ll know your buying power, interest rate and budget before you start negotiating — and can avoid getting taken for a ride by an overzealous car salesperson. Plus, you’ll be able to compare your pre-approved terms to dealer financing and choose the option that makes the most financial sense for you. With the average car loan term approaching six years, be sure to calculate the overall cost of borrowing over the life of the loan.
Do Your Research
Prices for the same make and model can vary quite a bit from one dealership to another — even within the same city. Check multiple dealers for the best price, and don’t rule out traveling somewhat if a deal is worth the trip. Also make sure to factor in any costs beyond the sticker price — such as insurance premiums, average repair expenses and resale value — for any model you’re considering.
Set Priorities
What are the non-negotiable features for your new car? Is four-wheel drive important to you? What about a sunroof? Maybe you want a hybrid model for better fuel efficiency? Know your “must have” features and be willing to let go of some extra bells and whistles to stay within your budget. Clear priorities can make it easier to narrow down your options and avoid decision fatigue.
Weigh-in Your Trade-In
If you plan to trade in your current vehicle, research its estimated value using reputable pricing tools so you have a realistic baseline for negotiations. Keep in mind that trade-in offers can vary widely. And while the convenience is appealing, rolling an undervalued trade-in into a new purchase can quietly increase the overall cost. Understanding what your current car is worth helps ensure the deal reflects the full financial picture, not just the monthly payment.
Stay in the Driver’s Seat
Buying a new car often comes with lots of decisions, trade-offs and potential detours along the way. But with some thoughtful planning and preparation, you can stay on course and drive away with a purchase that makes the most sense for your lifestyle and your budget.
Sources
https://www.consumerreports.org/cars/buying-a-car/how-to-buy-a-car-in-todays-challenging-market-a7648220054/
https://www.nerdwallet.com/auto-loans/learn/average-car-loan-length