Tips for buying a car

When purchasing a car, a goal should be to get the car of your dreams at a “fair” price and one that you can afford.  You must first do your homework before walking into a dealership or used car lot OR you are setting yourself up to be taken advantage of.  Knowledge is power so use these tips to prepare yourself for a most successful purchase.

-        Determine Your Budget – How much can you afford?  Do you have cash for a down payment or cash to cover the entire purchase?  Can you afford a monthly payment?  If so, how much per month.  Remember that you’ll have other costs associated with the car such as insurance, gas, maintenance, etc. so put those in your budget.  If you need a loan, where will you get the loan?  A credit union is a great place to get a car loan, so inquire at your local credit union and they will tell you what you can afford and how much they will lend you.  

-        “Cash” talks – Be a CASH buyer.  Even if you don’t have the cash to buy the vehicle outright, get your credit union to pre-approve your loan and then you can walk into the dealership with the confidence of a cash buyer.  You’ll know exactly what you can spend and know that you don’t need the dealership to help finance the purchase.  If you don’t like the dealership personnel, inventory or attitude, you can easily leave and go elsewhere with your “cash”. 

-        Do Your Research – Once you know how much you can afford to pay, do your research to determine which cars fit within your price range.  Research comes in many different forms and the internet and local newspapers/car magazines are great resources.  Make sure you explore the different dealerships in your area to see what cars they offer.  When you are at a dealership, let them know you are just browsing so you can look at all of the cars with minimum interference.  If the salesperson thinks you are going to buy today, they will be pushing hard to make the sale…so have the confidence of “cash in hand” and the attitude of “just browsing”.

-        Determine a True Value for Car - Once you know what kind of car(s) you want, you should understand how much it generally sells for and what the realistic price range should be.   You can use Kelly Blue Book as a good guide to determine the true value of a car.  EBay Motors can let you see what other buyers have paid for the same or similar cars.  Cars Direct can quote you what new cars should be priced at.  All these will help you determine the true value.

-        Determine The Value To You – Now that you know the amount you can spend and the true value of the car(s) you’re interested in, you need to set the maximum price that you’re willing to pay for a (each) vehicle that you are interested in.  Anything above that price means you decide not to purchase the car.  Remember, you want to act like a “cash” buyer and can walk away at any time.  Don’t “fall in love” with a specific car as there are many to choose from and many dealerships that would love to earn your business. 

-        Negotiate and Determine The Seller’s Lowest Price – BE PATIENT as you begin negotiating and NEVER put your best price on the table first.  Always give yourself plenty room.  Negotiate the price down from the seller’s original quote until you feel resistance to them going lower.  Then some questions to ask to try and determine their lowest price are:  â€œWhat’s your lowest price for this car” or “Tell me how flexible you are on the price?” or “How much would you take, in cash, today….to earn my business and not have me walk down the street?”  If you are able to get the price into your acceptable budget/range, prepare to have the car inspected; but if the price is not in your range, be prepared to walk away and/or move to another vehicle that fits your parameters.

-        Check Out / Inspect The Car (Not Applicable For New Cars) – Unless the car is under a manufacturer’s warranty, you should have an independent inspection performed by an automotive professional.   This inspection will warn you of any problems and you can negotiate those into the deal.  For example, if the car requires $200 maintenance and you know before the purchase of the car, you can have the seller cover those costs or take it off of the final price.

-        Close the Deal – Now that you have negotiated the price and have the benefit of an inspection, you should either close the deal and/or negotiate further based on information learned in the inspection.  If you learned things in the inspection that may allow you to negotiate a better price, you should be specific in discussing those issues as well as how much you expect the price to be reduced by.  For example, if the inspection identifies that a new set of tires are needed and tires cost $500, then disclose that and negotiate accordingly, leaving yourself room.

 If after all negotiations, you cannot go any higher than you already offered, walk away and leave your phone number and have them call you if they change their minds.

One last way to close the deal (on new cars) is by getting dealerships to compete.  Tell them the offer you have from another dealership on the same car and they may feel pressure to lower the price and make the sale.

-        So What’s the Total Purchase Price - Make sure when you are bargaining that you understand whether there are any other fees or charges to be added  to the final purchase price.  Be very specific in asking this question.  For instance, dealerships will try to sell you other products that they make a huge profit on.  Some of these products are useful and necessary and have value, but, just like the car purchase negotiations, you must be shrewd in negotiating or just say “NO”.  These products, such as GAP, Extended Service Contracts and Credit Life Insurance can also be purchased from your credit union and generally at a much lower price so inquire of your credit union before purchasing them at a dealership.

So if you went to your credit union first and got pre-approved, acted like a “cash” buyer and purchased your extended warranty and other back end products from your credit union, you will have saved thousands and had a much more pleasurable and rewarding experience.
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