If you’re planning, or looking, to buy a new car in the near future then consider these expert tips before heading out to dealerships or browsing the classified section. Between social media marketplaces and online car dealerships, shopping for a car has never been easier. You can explore and compare car dealers and find different vehicle types available in your area before ever walking into a dealership. While it may be fun to shop for the car itself first, there are important financial and personal questions that must be answered first.
Buying a car can be an emotional process. Some people get caught up in the feeling of euphoria when buying a new car, imagining how the car will make them look, and what their friends or peers will say. These feelings, rather than facts and objectivity, can lead buyers into making an impulsive decision. According to a 2019 Cox Automotive survey, nearly 60 percent of new car buyers are unsatisfied with how long the process takes. They noted that paperwork and negotiating are the most frustrating parts of the car-buying process. Often, this feeling could be avoided by planning and preparing correctly.
So before heading out to dealerships or browsing for sale ads prepare yourself with information, some simple numbers, and a list of priorities. That way when you see the perfect car you’ll know.
The most common mistake that car shoppers make is starting with the car. In reality, what you need before setting foot into a dealership is a budget: your budget. Buying a car is different from window shopping for clothes or shoes and making the wrong decision could have a financial impact lasting years.
While your income plays a significant role in developing your car budget, it isn’t necessarily the only factor. How much debt you have and your monthly expenses will affect this number substantially. Additionally, don’t focus too much on getting the lowest monthly payment, otherwise, you might miss out on negotiating the best overall price.
Do the following calculations to figure out what your budget is: how much are you spending currently, how much the vehicle monthly payment is, and how long it will take to pay back a certain loan amount. Then, keep the budget number to yourself as it will allow you a better position to negotiate from when you talk numbers with the seller.
Try to be honest and realistic about your needs and preferences. Between a sunroof and a back-up camera, which one is more important if you can only afford one or the other? Know which features are must-haves and which you can live without. Come up with your list of criteria before searching to save yourself time and make a decision based upon your needs, not wants, and save yourself from making a spur of the moment decision. If you’re on the fence about leasing a car, buying old. vs new, check out these advantages for each car buying option.
A surefire way to fail while buying a car is not doing enough research. Before heading out to the dealership in person you must explore all of your options, so you can compare and negotiate from a strong position. By doing this you can avoid an emotion-only based decision.
Don’t forget, if you’re buying a used car then you have to do research on that specific car too. We’re not just talking about the driving test, but the vehicle history reports and features. One positive about buying a pre-owned, certified car is that they’ve been tested and verified by the dealership so you don’t have to worry about getting a bad apple. Ease and security is one of the main reasons why many people choose to go through a dealership, rather than buying it through a private party.
Apply for loan pre-approval
By applying for pre-approval for a loan at DECU, you have better control of your car negotiations. For DECU members, you can get pre-approved for the best loan rate all through your Digital Banking portal. Simply log into Digital Banking and click on the Loan Requests tab, or apply by calling (800) 338-6739.
Many people choose to get a loan with a credit union because we are willing to work with people on a personal level, all while ensuring the best customer experience. Furthermore, our credit union is a not-for-profit organization established by members for members; that means you! Once you join our credit union it means you can enjoy the exclusive benefits as a member for life.
Weigh your options: Rebate vs. 0% financing
The decision making isn’t over once you’ve found your dream car. More manufacturers are now offering incentives to close the deal. The most common is a rebate or 0% financing. Looking for the best interest rate to finance the purchase of your vehicle can seem like a minefield of choices, so let’s look at this way:
A rebate will reduce your auto loan balance, while low-rate financing lowers your monthly payment. Your best choice is dependant on the price of the vehicle, how much the rebate is, and the interest rates available for financing.
How does an interest rate factor into a monthly payment that is both affordable and reasonable?
Here are some important factors to strongly consider:
- 0% is offered only to consumers with the best credit history
- 0% forces you to choose between the rate or the rebate; you cannot have both
- 0% is generally used on short-term loans, such as 36 months
- 0% is often used for models that have trouble selling or are in stock
- 0% may have hidden application or prepayment fees that further reduce savings
Don’t forget car insurance
Before calling it yours, don’t forget to call your insurance provider for a quote. Many car buyers often neglect this step in the process and get a hefty insurance rate for the oversight. Additionally, it doesn’t hurt to reassess your car insurance provider and shop for a new one before signing the purchase contract.
While shopping for the best insurance rates, don’t forget to check your local credit union. You will be pleasantly surprised at the savings. Another way to lower your insurance rate is by asking your insurer if they offer discounts for safety features, low mileage, and other factors. You can also try to take or renew a defensive driving course, set a higher accident deductible, and reduce unnecessary areas of coverage on older cars.
DECU Insurance Services offers great insurance rates for members, which allows you to bank and have your insurance policy all in one place. Rest assured that you get the best deal by being a DECU member. Get your free, no obligation quote here or call us at (844) 578-5566.
Congratulations, you’re ready to get behind the wheel of your new car! Start with these tips, and you won’t have to worry about making car buying mistakes. By knowing your budget, needed car features, and financing options, you will be able to find the dream car that fits your pocketbook.