Last updated on February 8, 2018 at 10:27 am
Buying a car is a big commitment and whether you’ve been around the dealership block or you are a first-time buyer, it is a decision that requires research and deliberation. If you are thinking of buying a car this year, here are some helpful considerations from a few popular sites across the internet:
1. Know your budget. Be smart about what you can afford. Generally you should be spending no more than 20% of your monthly household income on all auto-related expenses car loan payment, insurance, gas, maintenance, etc.) Sites like Bankrate have tools to help calculate your monthly home budget.
2. Old and affordable or new and reliable? Considering the pros and cons of both new and used cars within your budget is important. New cars can offer a period without repair costs and generally have lower loan interest rates. On the other hand, used cars usually cost less, allowing you to get a more expensive model for your money, but may have more immediate repair costs.
3. Narrow and assess. There are tons of makes and models, so do yourself a favor and narrow it down to only a handful. Once you are satisfied with your list, calculate ownership costs for each vehicle using tools offered by independent auto information websites like Edmunds.com, Consumer Reports or Kelley Blue Book.
4. Get interested in interest rates. Since only about 10% of car buyers actually qualify for those hard to believe zero-percent rates offered by dealerships, you should do your research to find out if you can get better financing elsewhere.
5. Invoice prices are important. If you are looking for a new car, be sure to note the invoice price along with the manufacturer’s suggested retail price (MSRP). If you are considering a used car, be aware of both its wholesale value and the dealership’s asking price. These are good places to start your negotiation. Both Kelley Blue Book and Edmunds.com are helpful places to find suggested pricing.
6. Take note of discounts and incentives. Sometimes dealerships will offer “cash-back” rewards on certain vehicles. Additionally, dealers might discount the price based on the buyer, for example students or members of the military. Websites like Kelley Blue Book and Edmunds.com are also helpful tools for researching current incentives being offered to dealerships by manufacturers.
7. It’s not a race. Don’t fall victim to instant gratification by purchasing a car without a thorough test drive. Make sure you’ve explored all areas of the vehicle before signing the dotted line. How comfortable are the seats? Is there enough legroom in the back? How big is the trunk? Although these might not be your most important criteria, they are worthy of consideration given the big role (and investment) your car will undoubtedly play in your life.
8. Keep it covered. Make sure your insurance is up to snuff. If you’re trading in a clunker for a new shiny set of wheels, your old coverage may not be good enough.
A conscientious consumer is a happy consumer. Happy shopping!
Check out these additional resources if you’re planning to buy a car: