Buying a car often involves three major decisions: 1) shopping for a car, 2) negotiating trade-in value of the car you currently own, and 3) shopping for a car loan. It is important to consider each of these decisions separately. If they are all lumped together as one deal, you may not really know the price you are paying for the car. If you negotiate the price you would pay for the car in cash without a trade-in, then you will have a better idea of what you are actually getting for a trade-in.
When shopping for a car, first decide whether to purchase a new or used vehicle. It is important to compare not only the sticker price but also the other costs such as gas mileage, insurance premiums, and likely cost of maintenance and repair.
Search publications and the Internet for thorough comparisons. Consumer Reports and Kelley Blue Book are two sources with a wealth of information.
Consider how you are planning to pay for the vehicle, and make sure you can afford it before purchasing. Often, prices on new and used cars can be negotiated. Knowing the wholesale price to the dealer, which can be obtained in Consumer Reports, can be beneficial when negotiating the price of new vehicles. Check the Blue Book price to learn what used cars are worth.
Knowing these facts beforehand can prove to be a beneficial negotiating tool and also makes the consumer more knowledgeable about the situation. Keep in mind that used cars often do not offer the same warranties as new cars, and there is a certain degree of risk associated with buying a used car.
If you choose a used car, it is important that you have a trusted mechanic examine the car prior to purchasing it.
Financing the vehicle, whether new or used, is a critical factor in the buying process. It is best to shop for a loan before buying the car. This will allow you to decide how much can be borrowed, the monthly payments that will be required, and the duration of the loan.
Keep in mind that a greater down payment will lower the amount to be financed, thus creating lower monthly payments. Use the Internet or the Yellow Pages to shop for the least expensive loan. Call your bank or credit union for a rate quote before talking to the dealer about financing. If you choose to finance with the dealer, make sure the rate that is offered is equal to or better than the one quoted by your bank or credit union. It is important that you get the lowest possible rate on the loan to avoid paying high interest payments throughout the life of the loan.
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