So that bucket of bolts you drove through high school and college has gasped it's final exhaust-filled breath. It’s done. Over. Kaput. You are now officially in the market for a new car. Soon you will be forced to visit the dreaded car dealership, where aggressive salesmen hover overtop you like vultures, all of them ready and willing to separate you from your hard-earned cash.
Do not fear. With just a little planning and some time spent studying, you can get a new car without breaking the bank.
First, you have to imagine driving this car for a long time in order to get your money out of it. Today’s vehicles run for a long time compared to earlier models, even after hitting the 100,000 mile mark, so buying a used car is the best option for your finances long term. DO NOT EVER LEASE A CAR!
Once you decide on a vehicle worth buying, it’s time to figure out how you’re going to pay for the darn thing. First, decide how much you can really afford to spend on a new car. How much do you have in the bank? I have repeatedly suggested that you never have a car payment in your life. I am still saying this now. The best option is to pay cash for a car that you can comfortably afford to insure and maintain for years to come.
Be careful buying! Once you’re on the sales lot and fall in love with a car, the salesperson will do everything in their power to get you to purchase more than you can easily afford. They want you to finance the new car through the dealership. Auto financing can mean big money to the car dealership, and most salespeople are going to take advantage of financing in order to upsell you. Financing your new car through the dealership is always convenient as well; it’s usually the quickest and easiest way for you to drive off the lot in your new wheels.
Buyer beware! Dealers know that buying a car is a mentally exhausting experience, and the finance department will often attempt to add fees to the paperwork for services or features you don’t need (extended warranties, service agreements, etc.).
Dealerships will also offer some really attractive financing deals, instant rebates, or low interest rates for new cars, most of these incentives depend on your credit score - which you should always know before you start looking for a car. You can check your credit score and correct any errors by visiting www.equifax.com, www.experian.com, or www.transunion.com.
If you are not going to listen to me and just have to finance the car of your dreams, at least secure a loan through a bank, credit union, or other lending institution before you plan to buy a new car. You will generally get a lower interest rate than what the dealership can offer you, and you essentially become a “cash buyer” since you have pre-approved terms somewhere else. Being a cash buyer means you may have more negotiating power on the total price of the vehicle, which means lower monthly payments, and you do not have to deal with the dealership finance department. Most lending institutions, upon approving your loan, will give you a "blank check" that can be made out to a dealership. Negotiate the price of the car along with tax and licensing fees, and off you go.
Whatever you do, always read every contract that requires your signature thoroughly. Make sure the numbers are correct and you understand all of the charges. If you feel pressured at any time you should walk away. Remember, you are the buyer and you have the ability to just say no.