Of all of the big purchases we make throughout our lives, a car is only second to home-buying. Most new vehicles are priced in the double digits — and the same is true for many used models, too.
Unlike other investments, cars tend to lose their value with age, making shopping around not only a smart but also a necessary practice to ensure you get the most mileage out of every dollar you spend. Here’s what auto experts say to focus on when you’re buying a car.
Go to a dealership with specific questions
Though it’s not exactly an interview, per se, pulling up to a car dealership without any inclination of what you want is a recipe for getting ripped off. Todd Deeken, co-host of the Everyday Driver podcast, says car salespeople are there to direct your purchases, but they are also motivated by commission, since it directly impacts their bottom line.
To understand your needs, Deeken recommends researching various models online, talking with friends and family members, and reading reviews before heading to a shop. This will also help you feel empowered to ask the right types of questions.
Deeken says to ask for what you need to make an informed car buying decision, especially if you feel like you’re being rushed to sign on the dotted line. “If you’re serious about a certain car, ask for a longer test drive, since some dealerships will allow you to take the car without them, or even overnight,” he says. “Cars are expensive, so getting a lot of time with it in situations you know will really tell you if it is right for you.”
Compare financing rates
Few people can pay for a car in cash. This is especially true for a brand spankin’ new vehicle. Still, don’t let the ability to finance your purchase push you over your budget. Knowing your financial limits puts you in a healthier position when shopping, says Zoriy Birenboym, the CEO of eAutoLease.com.
The way to save money is to shop around for the best financing rates. Some car dealers are offering killer deals just to move inventory, such as zero percent interest for years and months-long payment deferrals.
Birenboym recommends shopping for rates based on your credit score rather than blindly Googling deals.
Figure out the dealer invoice
Ever heard of a “dealer invoice” or “dealer price”? Listen up, because this figure is one of the secrets that should majorly inform your buying decision, Deeken says.
The dealer price is, like it sounds, the amount the car costs the dealer. Your aim is to negotiate toward that number. “There will be taxes, title, and license fees on top of that number,” Deeken says. “But if you get close to that number, you can feel confident that you got a decent deal.”
Knowing the dealer invoice comes in handy if there are multiple dealers in the vicinity with the car you want. While it requires a little bartering, being willing to travel for a better rate is a fast way to convince a salesperson to give a little on the price. “If one dealership is conveniently located for you, let them know that you want to give them your business, but also that you’re not afraid to take your money to their competitor the next town over to get a better deal,” he says.
Be resale savvy
A lime green Jeep with customized rims may be ideal for our Instagram account — but what’s the likelihood you’ll find another person who wants the exact same color and style in the future? Probably pretty low, Birenboym says.
He urges those in the market to buy a car to think about the vehicle’s next life. Unless you’re planning to keep a car forever, you want to ensure there is a market to sell it in a few years. In other words, think practical and re-sellable. “Buy what sells or holds value,” he says.
Birenboym says the best colors for reselling include black, white and gray. Blue or red are also fairly desirable, but a green or an orange hue is a tougher sell. “Don’t go spending thousands of dollars to revamp a vehicle, because what you like doesn’t mean someone else will pay for it.”
Never pay a “market adjustment price”
When a vehicle wins an award or is listed at the top of family-buying recommendations, suddenly the price goes up. Many industries assign a premium price to items in demand. But this is one area of the total price Deeken says to negotiate.
The market adjustment number is a tactic dealers use to put more cash in their pockets, he says. No additional money is passed along to the car maker. Deeken’s advice: “Refuse to pay a market adjustment price, and be prepared to walk away. You may have to shop dealers nationwide to find one selling at close to MSRP, or possibly wait until the demand for the car settles.”
Run a background check on a used car
Some people are Team New Car, while others stick with used to save cash. If we subscribe to the second school of thought, CarFax.com is a good first stop before buying a previously-owned vehicle.
Just type in the VIN or the license plate of the car in question and you’ll receive information about the car’s service history and inspections. If anything feels off, don’t be afraid to ask the dealer for an explanation. If purchasing from a private seller, ask them why they’re selling their car. “Good record keeping by the previous owner is an indication that the car was treated and maintained well, and therefore a good purchase,” Deeken says.
For added peace-of-mind if you’re buying a used car, get a pre-purchase inspection (PPI), which usually costs less than $100 at a mechanic shop.“No matter how nice the car might look, a PPI will tell you the condition of tires, brakes, oil, and most other regular wear or maintenance items. The car you are looking at may have a problem you can’t see, but a mechanic will,” Deeken says. “This isn’t a guarantee, but it can alert you to many hidden problems.”
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- Insurance Checkups for Auto and Homeowners
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