Whether you are shopping for your first car or or your tenth car, finding the right vehicle that fits your needs and budget is important. Aside from your home, your vehicle is probably one of your biggest investments. Nobody likes to feel ripped off on such a large purchase. The following 10 car buying tips will help you avoid common pitfalls consumers can fall victim to when buying a car or truck. Just make sure you're covered with an affordable car insurance policy.
1. Do Your Homework
This is the first of the tips for buying a car: do your homework. Terry Berg, a veteran car salesperson with an independent dealer that offers all the top brands from domestic manufacturers, said this is the first step any potential customer should take.
"Do your research and find out what kind of car you want," Berg said. "You may be single today, but does the vehicle you have your eye on meet your needs tomorrow?"
A two-door sports car may look great parked in your driveway today, but if you have any plans to expand your family in the near future, these vehicles make it difficult to drive with peace of mind if there's a baby on board.
2. Compare Prices with a Variety of Sources
One of the most surefire tips that can help you get the new or used car you want is to go the extra mile when it comes to collecting price quotes. Berg said his toughest customers are those armed with folders filled with price comparisons. Sometimes, these binders contain prices and incentives from the dealer down the street.
However, the Internet provides consumers with many more tools, especially for those of us who don't have time to visit every dealer in the city. A number of websites can help you determine if an asking price of a particular car or truck is fair. You can surf these sites in the comfort of your own home.
3. Know Your Credit and Financing Options
Not all car sales representatives are out to rip you off, but being prepared for it doesn't hurt. If you leave your credit check and financing options all up to the dealer, you could set yourself up for a scam. Unscrupulous dealers may claim your credit is much lower than it actually is in order for their financing department to charge you higher interest rates.
One of the best tips we can give you is to think outside of the dealership when it comes to your new or used car financing. Often, securing an auto loan through your personal bank or credit union rather than through the dealer will save you on fees and unnecessarily high interest rates.
If nothing else, you can use your own financing options as a bargaining chip during price negotiations. Berg said he has had several customers work out a sweeter deal by pitting the dealer's financing options against their own personal lender.
Keep in mind that financing will come with some car insurance requirements in most cases. Typically, a lender will require you to carry collision and comprehensive insurance for the life of the loan, in addition to the state-required liability coverage. Make sure you understand these requirements and their costs before you agree to finance your car purchase with any lender. An agent can help you understand your requirements and get you quotes at a price you can afford.
4. Play Hard To Get with the Dealer
Take your time. Never buy a new or used car the first time you show up at the dealer. One of the tips a lot of people overlook is just the sheer time you should spend shopping around. You wouldn't sign a purchase agreement on the first house you visit when shopping for a new home. Likewise, you shouldn't settle on the first shiny new car you see, either. You will notice each time you visit a dealer, the purchase price or other incentives may change. They want your business. Make them work for it.
5. Don't Be Distracted While Test Driving
Stay focused. As you take a car out for a test drive, most sales reps will want to distract you by showing you all the bells and whistles. They will try to learn as much about your car buying plans as possible. They'll ask you what you want your monthly payments to look like.
While that sounds like they're trying to keep you on a budget, they will try to sell you a car for the very most you'd like to spend. Why set yourself up to make the highest monthly payments as possible? There's nothing wrong with setting a budget, but neither is there anything horrible about securing far lower payments than you otherwise would make. Be vague and give them nothing.
Even if you fall in absolute love with a particular vehicle after taking it on a test drive, you're not quite done. Don't buy that car just yet.
6. Things You Should Not Do the First Time at the Dealer
This probably seems like a no-brainer, but a lot of people hand over too much identification when test-driving a car. Do not give them your driver license or Social Security card to photocopy before taking a test drive. Some less-than-honest dealers may use this information to run a credit check on you while the salesperson has you distracted.
Others may keep your license "hostage" until you sign a purchase agreement. Head to the dealer with a copy of your license handy. You can leave the copy with them and not have to wait around until "Troy" gets back from his "lunch break" with your card.
Want more tips for "what not to do"? Make sure you're working with a legitimate dealer. Do not buy a new car that does not have an MSRP sticker in the window. Berg said it is unlawful to sell a new vehicle without this sticker, and any dealer willing to do so isn't on the up and up.
7. Have Your Mechanic Check Out Any Used Car
Veteran diesel mechanic and self-proclaimed car buff Nathaniel Benoit advises all of his customers to swing by his shop during the second test drive of any used vehicle. He will check for any problems, major or minor, and can even help identify components that may need repairs or replacement in the near to distant future.
"Never buy a used car or truck that you haven't had a trusted mechanic check out," Benoit advises. "I have too many customers who bring their lemons to me after it's too late and they've already signed that purchase agreement."
The vehicle may be running just great now, but thorough mechanics like Benoit can point out repairs that could cost thousands of dollars beyond that cheap used car sticker price.
8. Make a Fair Offer
One of the tips that can be particularly useful when you've located that new or used car is not to insult the seller. Veteran salesman Berg said he has some customers do all the right things, only to make ridiculously low offers which the dealer could not possibly accept.
Most dealers will accept offers between 3 and 5 percent above their cost. That is not the sticker price but what the dealer pays the manufacturer for the pleasure of selling its products. A 5 percent profit keeps dealers in business while still securing a fair price for the buyer.
9. Negotiate the Right Factors
A list of new car buying tips wouldn't be complete if we didn't tell you to negotiate. Some dealers want you focused on the monthly payments while they sneak in all sorts of fees and bump your financing to more than five years. The longer you make those "low" payments, the more interest the dealer's financing department enjoys and the more your vehicle will cost when it's all said and done.
Keep the conversation and negotiation focused on the purchase price. So what if your monthly payments are only $300 if you have to pay them for two years longer than you would at a lower purchase price.
Most car sales reps start negotiations at the MSRP sticker price and go down from there. Avoid that haggle session by starting negotiations at the dealer's cost and work up from there. Start with a fair offer of 3 percent over their cost and you will find the purchase price much lower than if you simply went down from the sticker price.
10. Close the Deal
Especially when you're buying your first car, these tips are crucial. You might be so excited that your offer is accepted, or so tried from haggling, test driving and searching - but you must pay attention. Don't let the negotiation process take more than 45 minutes. Not only will the haggling leave you worn out and tired, but the sales rep will also lose patience (and the commission, as Berg points out).
While you're looking over the reams of paperwork with their financial services coordinator (a sales rep with a fancier name), be sure to take notice of any fees the dealer wants to charge you for the pleasure of buying from them. Some of these fees are negotiable, and some aren't. It never hurts to haggle a little more during the signing process.
Benoit also warns his customers about the extended warranties and extra "protection" dealers often try to sell at this point. They may even use your savvy negotiation skills against you by suggesting you put those savings you found with a lower purchase price into buying all sorts of unnecessary warranty packages.
"Half the time, those extended warranties have so many loopholes that most of the repairs I do aren't covered," Benoit said.
Be firm, be fair and be sure to thank them when you secure a good deal. A good deal means you found the best price while still allowing the dealer to profit a little.
"It's a win-win," Berg said.