What Should I Consider When Buying A Car?
Too many people fall in love with cars, sign up for a car note and then try to figure out how they’re going to make the payment work.
Well, that’s backwards. First, you should consider these tips:
- You should consult your budget to determine what makes sense for your budget once you not only factor in the car note, but also the car insurance, gas and annual estimated maintenance for the car you’ve got your eye on. A good rule of thumb is that your total car expenses should not be more than 15-20% of your monthly net income.
- Don’t start looking for financing for the first time once you get to the dealership. Financing at the dealership may be easy, but it’s not necessarily the best deal. Dealers are essentially acting as middlemen to offer you a car loan. They get paid for every loan they write, whether the loan is through the automaker or a local lender.
It is possible to get the best car-loan interest rate at the dealer, but you’re likely to find that it pays to shop around first. Know your credit score. Be especially wary if a dealer offers you a car loan at a rate that is far better than other lenders. Sometimes, dealers entice prospective customers with rates to get them to sign a contract to buy a car. Read all contracts carefully to make sure that the interest rate is not contingent upon approval.
I’ve always been a fan of getting prequalified with my credit union or local bank first. I’ve typically gotten better interest rates and it makes it easier to not be persuaded by some salesman that may not have my best interest at heart.
- Be prepared to negotiate. Since buying a car is such a pricey purchase, be prepared to negotiate to get the best deal. Before you visit a dealer, gather all your research materials so you are prepared. Know the cars bottom line price and find all possible discounts for the cars that interest you.
Automakers often advertise rebates and cash-back incentives on new cars to attract customers to their lots. Some dealers also will offer incentives on certified pre-owned cars or noncertified used cars. In addition, automakers often have discounts that apply directly to the buyer, such as for members of the military, current students or recent graduates or even members of certain local credit unions.
Research all of these incentives online at the manufacturer and dealer websites before you visit the lot so you know what you qualify for to save the most money.