Getting a new car (or even a new used car) can be a lot of fun – the new car smell, driving it off the lot for the first time, and having something more reliable than you probably had prior.
However, actually buying the car can be a hassle and a lot of work (trust me…I’ve bought 2 in the last 6 months and it was a nightmare). That’s why I’ve put together a simple guide of the five steps to buying a car to make it easy for you. Go through these steps and save yourself some stress.
As with any major financial decision, the first step is identifying your needs. Everyone has a little different need when it comes to a car, so make sure you know what you need versus what you want. For example, maybe you need a third row because you have a big family, but for many, a built-in DVD player is a little over the top and may just be a “want”. Identifying your needs (and sticking to them) is a great way to save significant amounts of money when buying a car.
The next step is to do your research once you’ve figured out what type of car you need. Some good places to start are Kelly Blue Book, Edmunds, and Consumer Reports. These sites will show you the best models that fit your criteria, and you can see what the reviewers had to say about why they are the best. This is a good starting point to find a reliable car.
Personally, I don’t feel like paying for Consumer Reports but I did rely heavily on Edmunds and KBB when buying a car recently. While I knew the particular type of vehicle we needed, and I knew which manufacturers were ones that I trusted, I scoured these sites for the best models and years those models were produced. It was quite intriguing to see all of the complaints from a 2009 Camry compared to the 2011 Camry. Needless to say, the issues/concerns I read about on the ’09 Camry aided in my decision as I opted for the ’11 model which had much better reviews. So far, so good.
Next, you need to figure out how much to pay. These sites also show the MSRP for various cars, and what you can expect to pay at dealers, as well as what the dealer probably paid for the car. This will give you leverage to negotiate later on.
The next thing you need to do is figure out your own finances. You need to see how much you can truly afford, and figure out the best loan rates. While I’d encourage every WSL to pay cash for a car, the reality is that most will be unable to do that. With that in mind, look at different types of loans, like car log book loans or credit union loans and see where you can get the best rate and terms. Always have a few loan options prior to going to the dealership as this will help in your leverage and also help in what you may be able to negotiate with the car dealership’s lenders. This is essential to getting the best deal.
The next step is to negotiate for your car choice online. Find every dealer within 200 miles that sells your car, and start requesting quotes online through their website for the car you want. Once they respond in writing, counter them. Even better, use an email from another dealer to beef up your negotiating position. Keep doing this until no dealer will go any lower and if you’re happy with the price, now is the time to go into the dealership.
Finally, you just need to seal the deal. Head to the dealership and test drive the car. Make sure that everything you saw online matches in person, and that the car runs well. Also, make sure that you bring the check from your loan company, so all you need to do is sign the paperwork and head home on that fresh smelling car.
Readers: do you have any tips when it comes to buying a car?
The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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