Buying a new car is thrilling – but only once you’ve signed the paperwork and driven off the dealership lot. The actual process of buying a new car can be frustrating, from initial comparison shopping, reading reviews, and haggling with salespeople.
But the car buying process doesn’t have to be so hard. Here’s the information you need to navigate the process and avoid some of the most common pitfalls when buying a new vehicle.
Know What You Want Before Visiting Dealerships
Some things can be purchased on a whim, but not a new car. Instead of shopping around from dealership to dealership, you really need to take the time to do your homework. You need to narrow down your options before you physically visit any vehicles – otherwise, a salesman might talk you into the wrong car.
There are many websites online that can help you with your research. Look at all of the available models in your ideal category: SUVs, sedans, crossovers, or any model that interests you. Check out your options, from gas consumption to safety features to reliability ratings.
And of course, compare prices and costs. You’ll be far less likely to be haggled into a bad deal if you walk onto the lot already knowing exactly what you want and exactly at what price. Do all of your shopping around online, then visit the dealership when you’re ready to buy.
Focus on Purchase Price, Not Monthly Payments
You’ve probably heard that you’re supposed to negotiate with the car salesperson to get a good price. And that’s true. Always assume there is wiggle room in the price.
What you don’t want to do, however, is talk in terms of monthly payments instead of the total purchase price. This is a trick salespeople like to use. If you’re talking in monthly terms, it can get very confusing for you to quickly calculate what the actual purchase price comes to. And that means, though you walked in intending to get a deal, you could walk out having overpaid.
Here’s some quick math to show you what this means. You want to buy a car that’s listed for $30,000. You happen to mention that you’d like to keep your monthly payments below $300 when negotiating price. A salesperson can easily keep your monthly payment under $300 if they stretch your loan term out to 72 months. But in doing so, you end up paying more in interest, which puts the overall purchase price at $34,000.
And that’s hardly the deal you were bargaining for. Don’t focus on monthly payment, focus on purchase price – and make sure you get the lowest total price possible, regardless of your monthly payments.
Get Pre-Approved for Your Car Loan
One of the final car buying steps is figuring out financing. It’s very common for buyers to choose their car, haggle over the price, and then secure financing through the dealership itself.
The absolute last thing you want to do is have someone at a car dealership setting up your new car’s financing. Once you’ve done your homework and know what car you want, as well as roughly the price you’ll be paying, find your own financing. Go to your bank and get pre-approved for a car loan.
Walking onto the lot already pre-approved with your own loan will save you from getting trapped into a higher-interest loan. You also won’t fall victim to one of the oldest sales tactics in the world: being told you’ve been approved for financing, only to be called a few days later and informed the interest rate will be much higher than anticipated.
You’ve spent weeks researching cars. You’ve selected the one that makes the most sense for your lifestyle and budget, And you’ve even gotten yourself approved for a loan at your bank. You then go to the car dealership, ready to haggle – only to be told the specific model you want is no longer available.
This happens all too often, and it’s because car dealerships like to use a “bait and switch” tactic. They advertise certain cars at “outrageously low” prices to get people in the door. Then, their entire inventory suddenly vanishes. But that’s okay, because they have plenty of other cars to “get you into.”
You can avoid this scenario by calling ahead to confirm the dealership has the car you’re interested in. If so, inform the salesperson you speak with that you’ll be coming in to check out that specific car.
Be Ready to Walk Away
Buying a new car is a big financial commitment. It’s important not to become too emotionally attached to any vehicle. If you walk into the dealership with a feeling of, “I can’t live without this car,” you will reek of desperation, and the sharks will instantly start circling you.
Always be willing to walk away from a deal that just doesn’t feel right to you. Take a few days to think it over. It’s important that you are in control of your financial life, so never sign on the dotted line if the deal just doesn’t feel right. There are other cars and other dealerships out there.