4 Steps to Purchasing a Car the Financially Savvy Way
Wouldn’t life be grand if we could purchasing a car was like buy a new toaster? When we need a new one, we just drive to the nearest store or click one button online and we’re all set.
What a dream!
The reality is that people do not buy cars in the way they buy toaster ovens. Purchasing a vehicle takes time, research, and oh yes, money! There’s also a trust factor involved. No one wants to feel taken-advantage of or rushed into a purchase.
In addition, there are so many questions to think over. What can you afford? Should you trade in your vehicle or sell it on Craigslist? How can you get the best deal?
Buying a car is one of the biggest decisions you’ll ever make, which is why it’s important to make smart decisions during the selection and purchasing process. We all know that we have to shop around and compare prices when buying a car, but there’s more work that has to be done.
Step 1: Establish your budget.
Before you start looking for the perfect car or the best financing option, dedicate a hard number to the amount of money you can spend and stick to it. If you decide to pay in full, you have to keep in mind the sales tax, registration fee(s), and insurance cost. If you plan on financing, you need to determine what you can afford to pay each month. Important note: Include monthly insurance, maintenance, parking, and gas costs into your budget.
Step 2: Negotiate on monthly payments.
Car dealerships love talking about monthly payments because, often times, this is where they can make a profit. They want to give you low monthly payments because it allows them to “work their magic” with other variables such as loan interest and length of payment. Instead, skip the initial monthly payments talk and go straight to finding out the very best price for the car. Then, talk financing options after you have found out their best offer.
Step 3: Know your credit score.
Dealers are infamous for telling you that your credit score isn’t good enough for a better interest rate, but they may not be telling the whole truth. That’s why we encourage you to shop around for financing. In most cases your bank might offer a better interest rate than the dealership.
Step 4: Get insurance quotes.
You’ve found the perfect car and are confident that it will meet your budget. Now it’s time to find the best insurance! You’ll need to get insurance as soon as you purchase the car (unless you want to wait to drive it), so be sure to obtain multiple quotes for car insurance. Staying with your current insurance provider might not be the best idea. We advise you to ask trusted friends and family and utilize user-verified websites (such as Compare.com) as a resource when collecting quotes.
We’d all love if the vehicle buying experience was just as great as the test drive, but usually that’s not the case. Be sure to take these steps to empower yourself before dropping into the driver’s seat when buying a new ride.
