My husband and I had to purchase new cars about a year and a half ago. My car, at the time, was pretty old and started to need more for upkeep than we thought the car was worth. My husband was in a car accident shortly after that and sadly his car was totaled, but at least he did not have any major injuries. This made us pros at car shopping in a very short period of time. Here are a few tips that we learned along the way.
- Decide exactly what you want in a car. Similar to when you are buying a house, determine what is on your must have list. Do you have to have a back up camera or bluetooth hookup? Do you have a long commute and need a certain MPG for your car? Are there certain models you will not consider?
- Technically number 1 & 2 are interchangeable or could be happening at the same time. Go to your bank and see if you can get pre-approved for a loan (if you don’t have the cash to cover your car). Determine what your payment will be based on the loan and what fits your budget. If you know you can only afford a certain amount, tell your bank that amount and they can tell you a loan amount based on this number. They can also tell you different amounts based on the length of your loan and the interest rate. It is good to get pre-approved by your bank so you have a start off point for a price for your car and so you don’t have to haggle with the dealership about your payment. If they have a better offer than your bank, you can always consider their financing, but this gives you a start and a leg up during negotiations. Also, check online for car loan interest rates and make sure your bank has a good rate. We went with our credit union because it had the best rates at the time.
- Begin checking prices for the cars you might be interested in purchasing. This is pretty easy to do nowadays since so much information is available online. My bank recommended checking out the Carvana (www.carvana.com) site. You can buy a car through this site, but I used it to compare prices too. You can put your criteria for a car in this site to get an idea of the type of car that is in your price range. If you have a certain car in mind, then you can look up that make and model to get an idea what it is selling for online. I also check Kelley Blue Book (www.kbb.com). This site gives you an estimate of what specific cars are selling for based on the make and model. I usually start with a site like Carvana first when I don’t know what make and model I am looking for, just to get an idea of what might be in my price range. Then I move to Kelley Blue Book to get the accurate price.
- You also might consider contacting your insurance as well. They can give you an estimate of what your insurance might be based on the year, make, and model of different cars on your list. This can help you when planning your budget with your new car payment.
- Now, you can begin looking online or visiting dealerships. You can check online at places like CarMaxx or you can also consider Carvana. I looked at both locations for prices and then went to the dealership. I wanted to see the cars before I made my purchase and there were several dealerships close to my home, so it made it pretty easy. When you visit the dealership keep you list of must haves in mind. For example, when I went to purchase my car I saw a car on the lot that was the same year, make and model as a car I saw on Carvana. The car was much less (by a few thousand) than the car on the Carvana site. The dealership really wanted to sell me the car, but it was more because it had extra features. The dealership tried to explain that it was more because of these features, but these were features that were not on my must have list. I explained this to them as well. I told them I would happily buy the cheaper car on Carvana and since this was the only year, make, and model of the car that they had on the lot, I was prepared to leave if the price would not come down (ALWAYS BE READY TO LEAVE). They came down on the price because they saw that I was not invested in getting the car. I ended up purchasing the car for almost the same price I saw online. 🙂
- The dealership will also try to convince you to use their financing and sometimes they will say the price includes their financing or something along these lines. Check their interest rates and the terms of the loan. Most times your bank will offer a better deal.
These are a few of the tips I have learned. The most important thing is to do your research before you make a purchase. Go into to the dealership will all the information and be prepared to haggle and walk away if they are not willing to meet the price you know the car is worth.
Good luck and happy shopping!