Things to consider when buying a new car

Deciding to buy a new car is a big decision, so make sure you are prepared when you end up at the dealer.

 Here are a few questions and concerns you should think about:

Start by compiling a list (on paper, your phone or in your head) of what qualities you want in the new car. Whether it be good for kids, sedan, roomy trunk, fast, stick, safe etc. just know what you want before you go.It's best to know what you are doing/want, than to go to the dealer confused and frazzled.

Would you like new or used?

Most people think new is always better, however, when it comes to cars, used might be the way to go. Cars lose thousands of dollars in value after they leave the lot as a brand new car. So why not go for a car that is a couple years old? They are still new feeling and working and are going to be a better deal. Also, some of the kinks may have already been worked out or fixed after a couple years with the dealer (check TSB blog here to learn more).

However, if you really want a nice brand new car, they are going to be maintained exactly the way you want to and you will know everything that has happened to it.

Should you buy or lease a car?

Buying a car is usually better, just for the price factor alone. You pay a, pretty much, smaller car payment every month and can only keep the car for a few years. So, for the amount of money put into the car, you might have been halfway there to owning it, which means you won't always be paying for a car.

Although, leased cars are always in good shape and run pretty smoothly. Plus, they are newer cars without the new car monthly payment.You will always have the newest model and technology.

Check out this blog post to figure out which may be better for your lifestyle.

What can you afford?

This step involves looking at your own/family budget to get an idea of what you can afford. You don't want to short yourself on bills, family money and/or personal needs with a new car payment. The normal is about 20% of your income for a car payment is considered good. Also, don't extend your car loan past 5 years or 60 months; your car could end upside down (owing more than the vehicle is worth). This could affect if you planned on selling or trading in before your loan is up.

Should you get the extra packages?

This could include a warranty on parts that aren't on the original warranty. Make sure this is written down and the dealer has good standing, meaning they have been around and in business with a good rating for quite some time.

A good rule of thumb is to start by test driving a base model and adding upgrades from there. The salesman might try to get you to add on some options that really don't matter to you. So try the base model and decide what you want from the car and go from there. Even small add ons can end up costing you thousands of dollars. 

What do all these random charges mean?

You see destination/delivery charges (costs of moving the car from manufacturer to dealer), marketing fees, finance charges (interest), all sorts of fees for registration and license plates, etc. There are tons of them and some may be able to be waived if you are pretty good at your negotiation skills. It might also help if you go towards the end of the month, when they are most likely to let the car leave for a lower cost to meet deadlines.

What is the invoice price and what does it mean?

This price tells the customer how much the dealer paid for the car from the manufacturer, but dealers get a lot of discounts and rebates after the fact.



You can find this information on consumer report websites. Going to a salesman with this information means you know what you want and a good idea of how much you can get it for.

With used cars, it may be easier to negotiate a new cost. They may have gotten a really good deal on it with a trade in or something along those lines. But the dealers will always be looking to make as much off of you as they can. So don't accept the sticker price as set in stone!


Knowing the invoice price of your car will tell the dealer that you mean business and expect a good deal. Don’t walk into the dealership without this information.

Negotiation/Financing

Ask the dealer how much they can work with you on price, then go in with the facts you have about the car (invoice price, ratings, discount programs, etc.). Just know, you probably will have to pay more than the invoice price for the vehicle.

Remember, you do NOT have to used the dealer's financing programs. You can absolutely shop around for your own loan beforehand or after. Credit unions are becoming increasingly popular for auto loans, due to their lower than normal interest rates.

Know your credit score before shopping, this information will let you know what kind of interest rate is appropriate for you. Which means don't settle on a high interest rate if you have great credit. You work hard for a good credit score and should take full advantage.

How safe is the car?

 

Do your research on this one. Check into crash tests, recalls, customer testimonials, ratings, reviews, etc. This is a big decision that usually affects your life for 5+ years, so don't accept less than what you want.

 

 

A few other things to consider:

• Don't rush the test drive. You should get a good feel for the car, how well it handles, if it fits the baby seat or your bikes. Learn the ins and outs of the car before deciding on it. Don't worry if the salesman thinks you are taking a little longer than usual; this is a huge decision.
  
• Learn about how much it will cost you to maintain and repair the car after warranties run out; some manufacturer's parts cost a lot more than others. This also goes for learning how much it will cost to insure the car.
  
• Use your car as a trade in, but it is best to negotiate your price before you let them know about using your car as a trade in.