Buying a car can seem overwhelming. Choosing the right year, make, model and color are just parts of the equation. Knowing a few car buying tips before you hit the lot provides you with power to make the right decision.
Here are three critical tips to help you on your way to buying a car.
1. Preparation is key
Begin the buying process online instead of at a dealership or car lot. Kelly Blue Book or Edmunds.com are good starting points.
These resources tell you what people have paid for the same type of car in your area. They also give a target range for negotiating with a car dealer.
Researching online also helps you take your time. Taking your time when buying a car is important because you’re more likely to make a well prepared decision.
“Nine times out of 10, a deal the salesman quotes you will be available the next day,” Oren Weintraub, a former auto salesman, told ABC’s “20/20.” “Prepare yourself to walk out of the dealership if you are being pressured and are uncomfortable.”
Checking out consumer discount programs such as Costco Membership pricing available through Credit Union West is another way to prepare. Pre-arranged pricing eliminates the need to haggle.
2. Negotiating power
There are many loan options in the banking world, and it’s important to shop around for the best one.
Jack Nerad, executive editorial director of automotive research company Kelley Blue Book recommends getting pre-approved for a loan.
“Get pre-approved for a loan before you venture into a showroom, then check out the dealer financing,” Nerad said. “Sometimes, particularly with factory incentives, dealers can beat other finance offers.”
Also, when negotiating prices, make sure to negotiate each piece of the car deal separately.
Separate your negotiation according to every profit center the dealer has: price, rebates, trade-in value, interest rate, lease rate, bank fee, alarms, maintenance, warranties, and any other products the dealer is offering. This helps you get the best deal for every dollar you spend.
However, financing through dealerships isn’t always the best option. Shop around at a few financial institutions to see where you can get the most favorable terms.
3. Financial institution financing benefits
When shopping among various financial institutions, you will know exactly who has your loan instead of settling for whoever gives the dealership the best rate.
Getting pre-approved before setting foot on the lot allows you to stay in charge. When you do, you’re able to go through the buying process with the confidence that your loan is already arranged.
It is also good to note that many financial institutions offer the same products as the dealership at a lower cost (i.e. GAP insurance and extended warranties). Comparing and contrasting these with dealership products allows you to figure out which has the best deal.
Buying a long-lasting, reliable car is within your reach, but it takes time and effort. However, all the time spent researching is less time spent in a car repair shop. By incorporating these three steps in your buying process, you’ll soon be on your way to owning the right car for you.