Finding and buying a perfect car is not an easy task. There are many decisions to make and factors to take into account, not to mention the rainbow of colours to choose from. The price, of course, has to be a deciding factor, as well as how often you drive the car. Whether you’re buying new or used, from a private seller or a car dealership, knowing what you want ahead of time and being able to walk away are two of the most important things you can do when buying a car. Read on for more information on how to buy a car.
Doing Your Homework
- Fuel efficiency
- Resale value
- Transmission type
- Engine size
- Miles/kilometers per gallon
- Current mileage (if car is used)
- The advantages:
- Freedom of choice. You can buy the car of your dream vs. being limited to the cars that are available.
- Better financing. If you do decide to finance on a new car, your financing rates could be better than if you bought a used car.
- Getting new features. New cars are stocked with new cutting-edge features such as interactive touchscreens on the dashboard, additional sensors and reversing cameras.
- Knowing what you’re buying. When you buy new, you have an excellent idea of exactly what you’re getting; there shouldn’t be any uncertainty lurking the background about the car’s history.
- The disadvantages:
- Spending more money. This one’s a no-brainer. You spend more money on a new car than you do on a used one.
- Immediate depreciation. As soon as you drive the car off the lot, it loses about 11% of its value. This is informally called the “lemon effect.”
- Higher insurance costs. It’ll cost more to insure that brand new convertible.
- Ambiguous information for model year. Is the model you’re buying a workhorse or a defective wreck? You can’t really know until later on — sometimes much later on.
- The advantages:
- Cost. Buying that car fresh off the lot sure can be expensive; buying a similar car from a classified listings can be drastically cheaper.
- Better insurance rates. Insurance companies know that drivers of used cars tend to be more cautious and price their insurance accordingly.
- Less depreciation. Your car will depreciate less if you buy used, because the initial depreciation was so drastic.
- The disadvantages:
- Higher dealer markup. Dealers know that they can make a killing on used cars. Buying a used car usually means a significant dealer markup.
- Higher financing. It usually costs more to finance a used car.
- Higher/more maintenance. Used cars usually need to be maintained more often and for more money.
- Unknown mechanical and accident history. When you buy a used car, you don’t necessarily have any information on who drove it, how often it was serviced, or whether it got into any accidents.
- Use the internet. A car salesman’s worst dream is an educated buyer: a buyer who knows what they want, does not want to be impulsive, and is aware of what’s available based on their budget. Searching around on the internet or in the newspaper can help you achieve this.
- Save your preliminary results. Saving the results of your research will give you a reference point as you continue to shop, especially if you choose to go to a car dealership. Dealers will have artificially high prices that you can spot if you’ve done your homework.
- Make sure you find the invoice price with all the available features you want. The invoice price doesn’t mean much unless it actually matches the features of the car you’re trying to buy.
- Knowing your credit score if you intend to finance. You can get a free report once a year from each of the three major credit reporting agencies. If you haven’t done so already, get your credit score.
- Shopping around for a loan from a bank or credit agency. Getting a loan directly from the dealership can be a bad idea. Get a loan secured before you walk into the dealership; the dealership might be able to beat the price, and if they can’t, you know you’ll be able to finance your car another way.
Deciding on Your Dream Car
- A smart dealer may try draw out the process, making you feel like you’ve invested a good amount of time in a car, and that walking away is the same thing as abandoning that investment. Don’t fall for that trap. Know that any time you spend researching or negotiating, even if the negotiation falls apart, is an investment in itself and will eventually pay off.
- Bring your somebody else with you on the drive. Your companion will help you remain analytical and focused on the task of extracting the best possible value for the car. They could also be another BS radar, if the salesperson tries to pull a fast one.
- Take your time and nitpick. If you’re going to buy this car, you should very well feel comfortable in it. Don’t rush the drive and ask questions that you want answered. Wait for clear answers.
- You can say something like: “I’m only prepared to negotiate on the final out-the-door price. If we can agree on a number, I expect that number to be the final number, not the starting point for another negotiation.”
- Don’t fall for the guilt trick. Don’t feel guilty for refusing an offer that you know is bad. A salesperson might make you feel guilty for “wasting his time” after taking a test drive. This is their job. Don’t feel guilty. They certainly don’t, their priority is to make a sale.
- Know that salespeople will start negotiating with an achingly, ridiculously high number. It’s their way of “breaking” you, and making you feel like the number they’re willing to come down on is actually a good one. If you know the invoice price (the price the dealer paid for the car), don’t be afraid to walk away from an insultingly high bid.
- Know the commission structure. After a “holdback,” the salesperson gets about a 10% to 25% cut of the difference between the sales price and the invoice price. The higher the total sales price of the car, the more money the salesperson makes in commission.
- The dealer may not want to play this game with you, but they’d be missing out on an opportunity to sell a car (something a dealer hates to do). Assure them that if they can give you the lowest possible offer, you’ll take their offer.
Before buying a used car, take the car to a qualified mechanic for a complete pre-purchase inspection. If you’re buying a used car from a private seller or even a dealership, ask to take the car to a trusted mechanic to check for performance, accident history, or even water damage. Buying with peace of mind will help you find the best deal.
- If the dealership tries to “pack payments” by surreptitiously increasing your interest rate, for example, know that the dealer may be subject to heavy fines, as is it illegal. If you believe you are a victim of packing payments, contact a lawyer.
- Act as if you know what you are talking about, do not allow them to sway you from what you are honestly looking for. Be confident and firm, and if they start swaying you to another choice, then just leave.
- When you go to a dealership, bring your spouse, or a friend. You are more likely to be taken seriously. If you do not have one, then walk in with an air of confidence. If you are a single woman, it is good to bring a male friend who knows about cars, so that you don’t let the dealer mislead you. Sales people will try to take advantage of you, don’t trust them.
- Check out Consumer Reports. It’s arguably the best place to look for impartial reviews, ratings, crash tests, reliability forecasts, and pricing guidelines for new and used cars. Start with their list of recommended cars, research them, pick out a few you like, and then go to the dealer. They also have an excellent guide to new car buying, a guide to used car buying, and even a guide to buying cars for teens. Much of their info is free, but a subscription is well worth it. They review everything from chocolate to computers.
- When you have done your homework, and know what you want in a car, then visit the dealership.
- Always ask yourself if the car you are buying is worth the money they are asking. If not, make a lower offer, and if they refuse, don’t worry – there are plenty more cars out there, the perfect one is just waiting for you to come along and find it.
- Always test drive the car, check things like the sound of the engine, whether the windscreen wipers work, air conditioning (if applicable), heater, indicators, gearstick, and headlights. Check for cup holders, compartments, the boot, the seat quality (no rips or stains), look in the bonnet to make sure nothing funky is going on, beep the horn, Check the comfort of the seats (will this car be comfortable on long trips?), The visibility (is it easy to see other cars?), does it have seat belts, air bags, roof handles, Sun shades, and a radio? (CD or cassette tape), and whether it works.
- Make sure you read the contract completely. Do not sign, unless you understand exactly what you are signing. If you are not sure, then take the contract home, and have an attorney read it. Once you sign, you have legally bought the vehicle!
- If you are concerned about the safety using the car if a bad situation was to ever happen such as a car crash, check out its crash test results on Euro NCAP before purchasing it.