Whether you buy a new car regularly or haven’t shopped for one since the invention of the minivan, the process goes more smoothly when you know what to expect. Let’s start with some good news: There’s a ton of information available to the savvy car buyer like you. And here’s some better news: Most dealers prefer working with informed car buyers. Having the information up front makes for a quicker and more transparent deal.
So here are 10 car buying tips to help you get the car – and the deal – that fits you best.
1. Assess what you like and dislike about your current vehicle.
This is a great jumping-off point for what you’ll look at next. Are you looking for the same kind of vehicle or have your needs changed? Is fuel economy a priority? The latest technology?
2. Learn the value of your current vehicle
The value of your current vehicle is a critical piece of the car-buying puzzle because it directly affects how much cash you will need to complete a car-buying transaction. If you own your car “free and clear,” meaning you purchased it with cash or you have paid off the auto loan, it undoubtedly has value. If you have not completed paying your car loan, you need to subtract that amount from its current value. You might owe more on the car than it is currently worth. You must figure that amount into the cost for obtaining your next vehicle.
Also on MarketWatch: 8 affordable new cars that get at least 40 mpg
How do you obtain the value of your car? Look up both the Kelley Blue Book Trade-in Value and the Kelley Blue Book Private Party Value. These will be excellent benchmarks as you prepare to make a deal.
3. Expert opinions count
Determine the vehicle that you’d like to buy by doing research at KBB.com. Access expert vehicle reviews, consumer vehicle reviews, car review videos, comparison tests and Buyers’ Guides. Choosing the wrong car is a bigger mistake than paying too much for the right car.
4. Determine a monthly payment that works for you
Determine the amount you can afford to pay as a down payment on your next car and how much you can pay per month based on your monthly income. This is where understanding the trade-in value of your current vehicle can really help.
5. Investigate financing and prequalify for a loan
Many car buyers prefer to have financing in place from a bank or credit union before arriving at the dealership. Then, if the dealer can match or beat your rate…great! This can save you thousands over the life of your loan and gives you additional leverage in negotiating a deal.
6. Know the fair price range ahead of time
Before you walk into the showroom it is helpful to have a good understanding of the price consumers like you are paying for the vehicle you’d like to buy. Happily, we have done the research and analysis for you in the form of the Kelley Blue Book Fair Purchase Price. After choosing the year/make model of the vehicle you’d like to buy (or after choosing two of three year/make/model trim combinations for comparison’s sake) use our on-site tools to look up the associated Fair Purchase Prices, which are presented as both a single number and a range. Using this information will help you come to a quick, mutually beneficial agreement with the dealer you choose to do business with.
See: How a dealer makes money on a new-car sale
7. Ready to transition from shopper to buyer
Equipped with information on the value of your current car, the equity you have in that car, your monthly budget, your cash and/or equity for a down payment and the fact that you have prequalified for a car loan, you are ready to approach a dealer or dealers to buy your car. You are coming from a position of strength because you have all the information you need to know what a good deal looks like.
8. Deal in person or online
There are two ways to initiate contact with a dealer. One is to walk into the dealer showroom, tell the salesperson what you want and then spell out the price you expect for your trade-in and the price you expect to be charged for the new vehicle. Often they will appreciate your seriousness, your knowledge of the market and the process, and you’ll be able to complete a deal quickly.
Another way to initiate contact with a dealer is by contacting the dealer through KBB.com. In fact you might choose to contact three to five dealers if they are convenient to you. By email you can spell out the parameters of the deal you expect, and you can ask them to bid for your business. Much of the negotiations can take place by phone or email.
Related: How to choose trim levels and options when buying a new car
9. Closing the deal
As an informed buyer, you should be able to come to an agreement with the dealer quickly on the cash price for the new vehicle and the cash value of your trade-in. This is the opportunity to ask about potential financing. The dealer financing might offer a better rate than the financing you have prequalified for. If so, you are absolutely free to accept that financing deal.
10. Make sure the deal is the deal
As you close the deal with the Finance & Insurance Manager make certain that the deal you are signing is the deal you and the salesperson agreed upon. Do not accept extra charges for things like “advertising allowance,” “ADM” or any other items you do not understand, but you should also be aware there are legitimate add-ons for sales tax (state and local) and license fees. If at any time in the process you feel uncomfortable or unsure, take a timeout or walk out. Remember the best day to get a great deal is the day you are comfortable you have researched all the potential questions, you are relaxed and you are alert.
This story originally ran on KBB.com.
Add Comment