Be Aware of What You Are Paying!
When people look to buy a car, a common mistake that is often made is the assumption that the sticker price in the window is a price set by the dealer. It is not. This price is actually called the manufacturer’s suggested retail price, or the MSRP. Before agreeing to pay this price, ask the car dealer to see the original invoice for the car. More often than not this will reveal a price lower than MSRP. There is no guarantee the dealer will sell you the car for the price listed on the original invoice, but it can give you leverage to begin negotiating for a lower price.
Consider if the Value is Worth it!
New cars begin to lose value as soon as you drive away from the dealer with it. With that in mind, you should know that sometimes it may not be worth it to buy a car new, as opposed to buying it used. If a new car’s price is a lot higher than its resale value, you may want to consider buying it used. A reason for this is because most people who buy new cars end up having to finance the car through loans and payments, and when doing this you become more prone to being taken advantage of by slick car dealers with contracts that charge high interest rates and include consciously hard to find repayment terms. If it makes financial sense to buy the car used, it is something you may want to consider.
If the Car is Used, Learn Everything You Can About its History!
If you are buying a used car, it is in your best interest to learn everything you can about the car’s history. If the car has been in an accident or has required engine repair in the past, you will want to know this so you can take it into consideration when deciding whether you would like to make the purchase. Sometimes, this information may also have an impact on the amount of money you would be willing to spend. In addition, if the car has been categorized as a “Lemon” in the past, it is in your best interest know this. Some of this information may be included in the vehicle’s “Cafax”, which the dealer may provide for you. If a dealer is not willing to provide the vehicle’s “Carfax” report, you may purchase it separately. However, it is important to know that even if a car has been declared a “Lemon,” or if a car has been in an accident, it does not necessarily mean the car is not a fully functional vehicle. However, these are things you will certainly want to take into consideration.
If Possible, Purchase the Car in Cash!
For many people, this may not be possible. However, if you can avoid financing the car through the dealer, or through a third party by simply paying cash for the car, you will be able to avoid a lot of possible stress. In many cases, entering into financing agreements, especially with a traditional car dealer can leave you susceptible to potential issues and scams. Car salesman are not trained to save you money. They are trained to make the most money they can from you. As a result, if you can avoid the hassle of possible high interest rates and bad repayment terms altogether by simply paying cash, you should definitely do it.
Be Smart Within the Payment Negotiation!
When you sit down to negotiate payments with a car salesman, a question he or she may ask is how much you can afford to pay per month. Do not answer this question! Questions such as these are not asked for the purpose of saving you money. They are only asked by car salesman to determine what their ceiling is in terms of what they can charge you. Choose your words wisely and always remember that you are negotiating to pay the lowest amount possible.
Make Sure You Are Aware of What is On the Purchase Agreement!
The Truth in Lending Act requires car dealers to include disclosures of information about all financing terms. Make sure you do not become a victim of a “yo-yo”, or a “bait and switch” scam where you agree to terms that turn into something you did not intend to agree to. Confirm your understanding of the agreement and hold the dealer liable for that understanding.
If Taking Out a Car Loan, Know Everything!
Before agreeing to a car loan, know everything about the loan you are agreeing to. The Truth In Lending Act requires companies to disclose all information regarding interest rates and repayment terms. If they do not you may be able to seek legal action. As a result, it is in your best interest to utilize this right, and be aware of these terms, while making sure you have a solid plan for repayment.