Buying a new car can be an exciting time. Many first-time drivers buy a used, beat-up vehicle from their neighbor and drive it around for a few years. When the time comes time to enter a dealership, most people have no idea how to approach the car buying process. Here are 4 tips for buying a car at a dealership.
1. Establish a Budget
Before you even step foot in a car dealership, you should have a budget already established. When you meet with your salesman and start exploring the beautiful new cars in the lot, your perception of what you can afford may be impaired. It is easy to fall in love with a model and let a sweet-talking salesman persuade you into buying something that you cannot afford. A good benchmark for a car payment should be around 15% of your salary. With all of your car expenses, your payments should not be exceeding 20% of your overall salary. You should get an estimate on the best cheap car insurance before you purchase a car. Establish your car budget before you look at new cars. This will allow you to use sound judgment, and not end up with a massive car loan that is way over your budget. Car salesmen are trained to sell cars, regardless of if you can afford one or not. Be sure to keep this in mind when starting the car shopping adventure.
2. Set up a Loan Before You Go
A great way to enter a dealership with confidence and an established budget is by getting preapproved for a loan before you go. You can do this at your bank, or local credit union. Doing this can allow you to compare interest rates and get the best interest rate for your credit score. When you apply for a loan at the car dealership, they can tack on a few percentages to your interest rate for their own profit. Also, inside the financial consultant office at the dealership, you may feel pressured into signing up for a loan. Prevent that unnecessary pressure by taking care of the loan approval process before you go.
3. Do Your Research
It is important to establish what you are looking for in a vehicle before you start the car buying process. Research car brands, models, and features. Test drive and look at potential vehicle options to narrow down your search. You should never feel pressured to move forward with car buying after a test drive. When you are ready to start the purchasing process, start by establishing a fair price for the vehicle. The sticker price is flexible. You do not have to discuss your trade-in or whether you need a dealership loan until the price is decided. Don’t give the salesman more information than they need. Take it one step at a time. If you are trading in a car, they may try to adjust the price of the car to make sure they profit. Be sure to also price your trade-in before you speak with the salesman. Get what your used car is worth.
4. Don’t Buy Add-Ons
Once you have established a price and potential loan payment, your salesman will have you go to the financial office. You will be alone with a finance manager, who will spit a bunch of numbers out at you, trying to sell you vehicle bundles, extended warranties, and gap insurance. You can say no to everything. You can always add the plans to your car down the line. If you are taking a long-term loan, adding fifteen extra dollars a month will add up. Gap insurance is good to have, but you can purchase that through your insurance company.
Car buying can be a stressful process, so be sure to have all your financial figures established before you go to a dealership. Never be afraid to walk away and take some more time to think. New cars aren’t going anywhere, there is no need to rush the process.