March 15, 2013
Buying a car is usually a fairly expensive purchase, and is actually the second biggest purchase a consumer can make next to buying a home. Whether you’re buying a new or used car, knowing what you’re looking for and how much you should pay for it is key. Before you drive off any car dealer’s lot, here’s how to make sure you didn’t buy a lemon and that you got the most bang for your buck.
Don’t assume you have to buy a used car. Since there’s a strong demand for used vehicles it’s hard to get a good deal. On the other hand though, there are more budget friendly cars that are new now than the market used to see annually, and there are over twenty new cars priced under $15,000 or less. A new car may actually be a wiser buy also because you stand to get a better interest rate than on a used car, so in the long run, new may be the way to go.
Determine what your budget is. You shouldn’t even begin looking at vehicles until you’ve figured out how much you can spend. Find a budget calculator and auto loan calculator to help you find your budget. A safe rule is to spend under twenty percent of your household income on all of the household’s vehicles costs, including insurance, gas, maintenance, and repairs.
Consider the entire cost of owning the car. When buying, it’s safest to pick a car that is at least five percent less than your allotted budget so you can make room for fuel, insurance, and maintenance costs. Also, consider the costs of auto insurance. When you’ve narrowed down your choices to a few cars, get quotes on all of them, because no two cars will be the same and the type of car will impact the quote. To get the most accurate quotes, get the VIN# of the cars to give to your agent.
Research the models you’re interested in. Odds are you’ve seen a few cars that interest you, but you need to ‘look under the hood’ a little more and do some research. Read driver reviews, look at the manufacturer’s website for info, or use vehicle info sites like NADAGuides.com or KBB.com.
Shop around for the best interest rates and dealer incentives. You’ll see tons of ads from dealerships offering zero percent financing, but in fact, only about ten percent of consumers actually qualify for this financing. Before you even go to a dealer, get some quotes from lenders and have financing ready BEFORE you go shopping. It gives you some leverage power for price also. Approach manufacturer financing with caution, as they’re only interested in selling you the car and not looking to see if you can actually afford the loan. Also, manufacturers regularly offer dealers incentives to sell particular cars, usually around $1,000, so check with Kelley Blue Book to see what incentives are being offered at the time.
Most important, keep your options open and don’t feel pressured by anyone to buy, including yourself!