How to buy a new car: get the best deal

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If you’ve spent the last few months dreaming about a new vehicle in your driveway, you’re probably looking at models, comparing deals, and thinking about how to buy a car. Right now, however, one of the best car buying tips is pretty straightforward: wait.

The COVID-19 pandemic has created challenges for the auto industry. According to Charlie Chesbrough, senior economist at Cox Automotive, the automotive market is “very limited in terms of product availability, and buyers may not be able to get the color or finish they want.”

And if you’re not looking for a new model, you still risk sticker shock. Edmunds data shows that the average listing price for a used vehicle increased by over $ 700 between June and July.

There is good news, however. The end of the year is traditionally a great time to buy a car, and the postponement of the model year – the time when manufacturers start adding next year’s models to dealer bundles – is expected to begin soon. have an impact on the industry. Now is the time to do your homework and plan that big purchase.

When you’re ready, follow these 12 tips for buying a new car.

1. Find out what you can afford

You can have your heart set on a specific car, but you won’t be able to take it home unless you can afford it.

A good rule of thumb is to spend no more than 25% of your monthly household income on all cars in your household. This figure should include your monthly car loan payments and all other vehicle costs, including fuel and car insurance. For the monthly payment alone, you should aim for 15%, according to Ron Montoya, editor of consumer advice at Edmunds.

2. Define your meaning of “new”

The car might be new to you, but that doesn’t mean it has to have zero miles and that new car smell.

“Used cars will obviously be a little cheaper, but you need to be aware of the condition levels,” says Montoya. “While a new car, they are in perfect condition, but they will cost more.”

Certified pre-owned options can be a great route to a new car and a cheaper bill too. These vehicles must meet a manufacturer’s seal of approval – meaning “certified” – so you’ll be assured of a warranty you might not get if you’ve thought about how to buy a car from. a private seller. The savings can be substantial. According to Edmunds, the average price of a certified pre-owned vehicle is 33% lower than that of a new vehicle of the same model. For example, buying a certified pre-owned 2017 Toyota Camry would cost you around $ 17,000, while a new 2020 Toyota Camry would cost over $ 27,000.

3. Decide if you want to buy or rent

Do you want to drive your new car while the wheels can stay in place? If so, buying is the way to go.

However, if you want a new car every three years, consider rental. Leasing means you could get a more premium car for your money, but you won’t own the car and will have to pay attention to the leasing conditions to avoid hefty penalties. Consider vehicles on your radar and weigh the pros and cons of buying and leasing one of them.

4. Refine your choices

After you’ve budgeted and determined what type of property is right for your driving habits, start researching the vehicles that have caught your eye.

Visit the websites of automakers and independent automotive information sites to assess the features that are important to you. Note the MSRP (Manufacturer’s Suggested Retail Price (MSRP)) and invoice prices. Check local inventory listings to see what’s available in your area.

5. Find out what it will actually cost

This new car isn’t just going to stay in your driveway. You’ll be navigating the surrounding area and those miles mean more property expenses, including gas, insurance, repairs, and maintenance. An automotive research site like Edmunds Where Kelley Blue Book can provide a general overview of the cost of ownership for your area, but these numbers will vary depending on your personal situation.

For better accuracy, make your own fuel calculation based on the number of kilometers traveled annually and get a car insurance quotes on the cars you are considering that would apply to the drivers in your household. Be sure to give the insurance agent the exact model, including trim level, engine, and sometimes some add-on options, to get an accurate quote.

6. Block your financing – (before going to the dealership)

Dealers don’t just want to sell you a car, they also want to coordinate the car loan. Dealers generally receive a flat fee or commission on the auto loans they facilitate, whether the loan is from the manufacturer or a local lender.

Instead of letting your dealer do the work, compare auto credit rate at banks and credit unions, and get a pre-approved loan offer before you go to the dealership. Going in with this pre-approved offer is “always a good idea,” Montoya says, “just to see what you can get approved for and find out what you can afford and also to be able to compare interest rates.”

7. Talk to the dealer about financing

Getting pre-approved by a bank or credit union doesn’t mean you have to take this offer. And if you have excellent credit, a dealer may be willing to give you a top notch deal right now.

When the COVID-19 pandemic disrupted the auto market, automakers began to offer numerous 0% financing offers. In June, nearly 20% of new funded deals were these deals, according to Edmunds. As manufacturers start to pull out of these deals, they’re still here.

However, it’s important to note that even 0 interest may not be the best deal. You might be better off taking cash back from an auto maker and getting financing on your own from a bank or credit union.

To determine what makes sense for your finances, start with identify the best interest rate you can get and compare using Bankrate auto discount calculator vs. low interest rate.

8. Get all the price information

The searches you did on independent automotive websites should have included the invoice price (for new cars) or wholesale price (for used cars), as well as the MSRP (for new cars) or the price charged by the dealer (for used cars).

While the prices charged on third-party sites aren’t entirely accurate, it’s a good indicator of what the dealership paid for the car. Try to come to an agreement on the selling price close to this number before applying any discounts, and keep in mind that the dealer must make at least a few hundred dollars in profit to cover the costs of running the business. concession.

Ask the dealer for a detailed quote. “Anytime you ask for a quote for a vehicle, you want to ask for a breakdown of all the charges so you can see exactly what’s there,” says Montoya. “And if anything is unfamiliar to you, feel free to ask about it. The typical things you are going to pay are sales tax, registration fees, and documentation fees which are what the dealer does. invoice to process documents.

9. Look for all possible discounts in advance

If the dealership is promoting cash back offers, these incentives must be deducted again after you have negotiated the price.

Keep in mind that many automakers offer discounts to students, military personnel, and even members of some credit unions. These discounts can be accumulated and combined with the model’s cash back discounts. Check the websites of the automakers for these incentives.

10. Make your calendar your bank account’s best friend

Make sure you consider the time of year before buying a car.

Dealers generally hold their big sales events, usually around the spring, fall and end of the year. This is when you will see an influx of returned rental cars.

If you are looking for a pre-owned or certified pre-owned option, here are some of the the best times to buy a car. Holidays can also be a great time to treat yourself to a new car.

11. Take it easy with your test drive

Most car buyers keep their cars new for about six years, so take your time with the test drive. Make sure you really like it and want to spend over 11,000 miles on it each year (the average number of miles each American covers in a year, according to AAA).

Don’t hesitate to ask for more time behind the wheel to make sure you enjoy the driving experience. Spend time in the car while it’s parked to adjust the seats, experiment with the controls, and determine if passengers would be comfortable and if your regular cargo would fit well.

12. Before you go, negotiate hard

When you’re ready to make a purchase, forget about trading in your old car if that’s part of your plan. You will do better if you negotiate the sale price of your new car and the trade-in value of your old car separately. Make sure you have researched the value of your current car online so you know if you are offered a fair price when the trade-in is discussed.

Once it’s time to sit down and talk about pricing, prepare yourself with the research you’ve done. “I like to negotiate with facts,” says Montoya. See if other dealers have better deals on your vehicle and find a price match with your dealer. You should also be prepared to say “no” to those nice extras that you may not need.

Before signing the final contract, carefully review all the details. Make sure you don’t pay unnecessary fees, and check that anything you have negotiated orally is also spelled out in writing.


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