 Introduction
Buying a car is like no other shopping experience.
The choices seem to be endless. The price you see on the
sticker isn't the price you pay -- you must negotiate. You
can lease or buy, new or used. A trade-in is often involved.
And most people have to navigate another separate
transaction: financing the deal.
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Top 10 things to know
Here
is an overview of the most important points of this lesson.
1. Make sure you are getting the right
vehicle.
This seems obvious, but you could wind up an unhappy car owner if
you haven't thought carefully about how many people, and how much
luggage or gear you need to carry.
2. Assess the worth of your old car.
Whether you plan to trade it in or sell it, your current car can be
an important factor in your budget. Checking the right Web site and
maybe your local newspaper will give you a realistic valuation.
3. Decide whether new or used is best for you.
Cars are built better now than in the past, so used cars make a lot
of sense. But if you get a rebate or other cost break, the math may
be on the side of a new vehicle.
4. Consider whether leasing or buying makes
more sense.
Leasing provides lower monthly payments than buying with an auto
loan. But it's not for everybody. If you don't have money for a down
payment or if you trade your car every two or three years, you may
be a good candidate for a lease.
5. Do your homework and set your target price.
The Internet has made it easier than ever to find out the dealer's
cost for each vehicle and its options. That's the first step to
getting the best possible deal.
6. Shop for money before you shop for the car.
If you plan to buy with a loan, check your credit union or local
bank quotations (on websites) to find the lowest rate. Getting a
pre-approved loan will give you added confidence in negotiating a
good price.
7. Negotiating a lease
In the complicated world of leasing, the dealer will have the upper
hand unless you learn the jargon and how to negotiate the various
segments of a lease deal.
8. Negotiate a purchase.
If you are doing it yourself, get bids from several dealers, keeping
the focus on the dealer's invoice price, which you will know from
your research. We suggest ways in which you may be able to get bids
without going to showroom after showroom.
9.If you hate haggling, consider hiring help
or using an Internet service.
Online auto-buying services make things easy with pretty good,
no-haggle prices. But with most of them, you get quotations from
only one dealer. Consumer services that shop several dealers near
you may deliver even better prices.
10. Don't let the deal-closer close out your
savings.
The finance manager isn't there just for the paperwork. He or she
wants to sell you high-profit financial and mechanical add-ons.
These are seldom worth the money.
The right
vehicle
Before
you shop, do your auto-biography.
Hey, wait. Don't go down to the car dealer and
start shopping immediately. Are you sure that the car, pickup, sport
utility, or van you have in mind is what you really need? If you
rush into a deal without carefully considering how you will really
use the vehicle, you could be making a $20,000 mistake, at the
average new-car price.
Sure, you want a car that will make you smile.
But consider the purpose of most of your driving. Is it commuting?
Hauling kids? Weekends? Vacations?
If you drive more than half an hour to work every
day, a combination of a comfortable ride and reasonable gas mileage
become important. If you frequently drive clients or co-workers to
lunch, a sleek coupe won't be welcoming for whoever has to crawl
into the back seat; you need a four-door sedan. If you frequently
haul your kids and their many friends or classmates, a minivan or
sport utility with three rows of seats may be essential. If weekend
errands involve hauling building materials or large bushes, that
same utility or van will come in handy.
Be honest with yourself. What is the largest
number of people you carry regularly? What is the biggest pile of
gear, luggage or haul from Home Depot? Once you have made this
practical matchup, however, you still have lots of choices. With
careful planning, you can get a vehicle that you need AND that you
really want.
Unless you are that lucky car shopper who has
really made it and plans to let the world know it with a luxury car,
you have to fit your automotive wants and needs into what you can
afford.
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