12 Key Things You Should Know Before Buying a Car

We’ve all seen those annoying credit check commercials where the car buyer giddily gets into a shiny floor model car and then finds out his credit score is going to prevent him from purchasing the vehicle of his dreams. Then there’s the person who has just purchased a new car only to find themselves on the side of the road in a broken down lemon. We all think it can’t happen to us, but if we aren’t diligent when we are car shopping, these things could easily happen to us. Here are a few ways you can prevent it from happening to you.

The Price is Right

Automakers recognize the social component of car buying. Ad campaigns play on our desire for cars to reflect our personality. Emotion can play a role in what we purchase, but it will be to our detriment if we don’t account for our ability to pay. Some experts suggest that the total monthly expenditure on your cars should be no more than 25% of your income. That figure includes gas and maintenance as well as the monthly payment. Spendthrift Dave Ramsey suggests that your cars’ value be no more than half your annual income.

New or Used

We may want to have the latest model car, but is getting a new car the wisest move? Thanks to our neighbors’ leasing vehicles, the number of used cars or certified pre-owned models are higher than ever, making buying a used car very attractive. A certified pre-owned car will still have some warranty and the vehicle must meet certain requirements to carry that tag. These cars may be a better value over time.

Good Credit Matters

You should absolutely know your credit score before going in to make a deal with a salesperson. A credit score below 600 is likely to cause you to pay more upfront and more over time with higher interest rates.

You can deal with financing or loan matters with your bank or credit union before going to buy a car. The dealer may hate that because they may have a deal with a lending institution where the dealer makes a commission on any financing deal they bring in.

One more point, you don’t have to get a car loan from the bank where you normally bank. Shop around. Credit unions may be a better place to get a car loan than a massive financial institution.

Research Matters Thoroughly

The Internet is your friend when you want to buy a car. There are hundreds of car owners and enthusiasts out there ready to share what they know about their cars, including the problems they’ve had with a car that the manufacturer isn’t solving.

The first-hand knowledge offered by consumers is probably the most valuable. Yet, you may not want to overlook reviews by seasoned auto journalists and reports from watchdog organizations that want to help corporations behave.

It’s Electric

Currently, federal and state governments are offering tax incentives to those who buy electric cars. If finances are really an issue, buying an electric or hybrid car may not be the right move for you. You have to examine whether the savings on gas and the tax offset will make up for the upfront expense of buying such an expensive vehicle. If you want to change the world, however, the electric car will be leading the . . . charge . . . .

Where You Buy

If you aren’t getting a new car, you have options. You can buy from a dealership, an online broker, an auction site or from someone down the street. Buying from a private seller doesn’t give you some of the minimal security you get with buying from a dealer, and they don’t usually offer soda and chips. If they do, you might want to reconsider doing business with them. Or not.

The Games Dealers Play

The salespersons at some dealerships are trained to do things to throw you off your well-planned purchasing strategy. They know that more often than not we’re savvy and coming in with a specific amount we’re willing to pay, a credit report and a mean look in case they try anything funny. So they may try to establish a Type-A persona to intimidate you. They will distract you with sodas and snacks. They’ll have the latest action movie playing in the showroom. They’ll tell you how many of the same car they’ve sold to people who have the same job you do. They will do anything to get your head turned in the wrong direction. Don’t let them.

Sales Aren’t Always What They Seem

At certain times of the year, dealers are under pressure to get rid of new cars on the lot. It’s often during the fall when the maker is releasing new models. Sometimes you may get a slightly better deal during at the end of the month when a salesperson needs to meet a sales quota.

However, we may be more tempted by advertised sales than the timing. A dealer may offer what appears to be a too-good-to-be-true offer like $3,000 off the wholesale price. The dealer is likely to have marked the wholesale price up $3,000 to offset the offered deal.

The Final Price Isn’t Always Final

Once you think you’ve agreed on a price to pay for a car, you may well be in for another hour of haggling as salespersons suggest add-ons and other things. It’s probably not a good idea to tell your salesperson how much you’re trying to pay per month, especially if you’re financing with them. They will then be able to add on items to the sale, like a worthless warranty, that have nothing to do with the price of the car while keeping your monthly payments at the price you wanted.

It’s a Great Car, Trust Me

Many manufacturers offer some kind of limited warranty on new cars. Some dealers get in on the action to get you to purchase a vehicle from them. As long as those warranties don’t add to the car’s final price, they are great.

When you purchase a used car, you are very unlikely to receive any guarantees from the dealer that the car is even going to make it home with you after you sign the contract. That’s because with the exception of “certified pre-owned” vehicles, dealers don’t have to guarantee the usability of the vehicle. It’s up to you, the purchaser, to make sure it’s really worth the asking price. It may be worth your while to ask a mechanic to examine the car before you buy it.

You’ll Need Insurance

In most states it’s a misdemeanor to operate a motor vehicle without insurance. So, you’ll need to have a plan in place. Look for the best deal as you would with any vehicle. If you already have insurance, you’ll need to place the new car on your old policy.

Relax

Stress can affect or change your normal decision making process. If you’re a generally calm, logical person, yet one who needs to buy a car RIGHT AWAY after some unforeseen circumstance, you may not make the best choice. Treat it like a game or puzzle (you like games, right?) and go through the process, rewarding yourself in the end with the knowledge that you’ve made the best decision for you and your family, saved yourself a little money and have come away with a car that makes your neighbors check you out a little more closely.