Buying a new car is fun and exciting, but it can also be risky to your wallet. Even if you have quite a budget to work with, there’s no point in paying more than necessary for your car. And there are different ways you can end up paying more if you’re not careful, both on the price of the car and the financing of the new car purchase.
First, do your shopping before you go to the dealership. Look in newspapers and advertisements at the cars you’re interested in. Comparison shop online. Find out how much the full coverage insurance on the car you want would be per month. Also, find out about how much the monthly payments will probably be on the car—you can usually find this in newspaper ads and online to get a baseline idea.
If it’s in your budget and all is well with your first choice, then you’ve done the step many people ignore that costs them money—you know what you want. It’s much harder for the car salesperson to talk an informed consumer into a more expensive purchase than it is to take someone with only a vague idea and put suggestions in their head about what they really want (learn more about negotiating with car salespeople).
As part of deciding exactly what you want, by the way, don’t stop at make, model and color. Decide the features that you must have in this car and those that you can do without, as well as some that you can compromise on one way or another. Added features can dramatically raise the price of a car—or lower it—after you’ve already decided what you’ll pay.
Next, know exactly how much you can pay down, and strongly consider shopping around for financing. You might be tempted, now that you know exactly what you want, to run for the dealership and buy that car! Give yourself some breathing room though and take it slow and steady. Go to your credit union or bank and find out the terms of the new car loan if you got it through them. Look at other banks and shop around.
You can secure financing before you go in the form of a pre-approved loan if you wish. Or you can take the quotes with you to the dealership, negotiate the price of the car, and then ask them if they can beat those terms. Know your credit score when you walk into the dealership to avoid being told it’s too low too qualify for a certain low APR. Just be sure you’ve nailed down the price of the car before you start talking about financing, or they’ll adjust the price they give you to make up for lower interest rates.
Also, if you’ve decided you need a certain car only with certain features and the cars on the lot have lots of extras, consider ordering a new car with only what you need. This alone may prompt the salesperson to lower the price of a new car on the lot.