Purchasing a new car, for the first time or the 10th, can be daunting. Besides a house, it’s probably the most you’re going to pay for any single item, it’s going to be with you for years and, depending on your commute, you might be spending hours with it every day. It’s important to get it right. Here are 11 tips to help you on the way:
1. Buy used
While everyone loves that new car smell, used cars are generally going to be more economical. Cars suffer the most depreciation in the first few years — including a big drop the moment the vehicle drives off the lot — so the goal is to find one that’s a year or two old and in good shape. Let someone else take that big initial loss. Yes, buying new will allow you to customize it with the extras you like and in the color you want, but with a bit of luck and shopping, you can likely get most of those features in a used model. Members can take advantage of our partnership with Enterprise Car Sales for exclusive deals on your next vehicle.
2. Have a budget and stick to it
Ideally, you should buy a car outright, if you have the financial reserves.
Otherwise make a realistic budget that includes how much you can make in a down payment, and how much you can afford in monthly car payments. You might want to play around with an auto loan calculator, which can help you figure your monthly payments. Change the loan amount to see how much you can save each month if you make a larger down payment. If you don’t need the car immediately, save some money for a larger payment up front in order to lower the costs in the long term. Also be sure to look at the length of the loan. A longer term will mean smaller monthly payments, but it will end up costing you more in interest over the life of the loan.
Remember that the price you see may not include taxes and other fees. And don’t forget associated costs such as insurance, registration, maintenance, parking and gas.
3. Arrange financing
If you’re one of the lucky ones who doesn’t need a loan, you can skip this step. Otherwise, it’s best to arrange for your loan before you go in. Doing so affords you the time to shop around for better terms, and lets you make a decision without a high-pressure salesman sitting across from you. If the dealer can make you a better offer, that’s great, but it’s best to have options. See Member Services about getting pre-approved.
4. Determine your needs
What’s this car for? How many people will it be transporting, and how far? Are you going to be in a city where parking necessitates a smaller car? Will you need to hitch something to it? Make an honest assessment of your bottom-line needs.
5. Determine your wants
Needs are more important, but you need to be happy with your purchase. It’s OK to have a little fun — as long as you stay within your budget. If you really want those upgraded speakers and can afford it, a little splurge won’t hurt. Just don’t get carried away and these little compromises won’t seem so heavy.
6. Do your research
Once you’ve narrowed things down to a few models, check reputable third-party reviews. There are a number of websites to help you along the way. You’re looking for vehicles with a track record of reliability and safety. Some sites even help by calculating estimated maintenance and other charges for a given car.
Edmunds.com has a lot of information, along with a True Cost to Own calculator. J.D. Power, Consumer Reports (if you don’t have a subscription, you can usually get access at your local library) and Kelley Blue Book (which has a calculator on the five-year cost of owning a car) are other good sources.
Once you’ve got the numbers, compare them with your budget; it’s likely you’ll eliminate a few options as too expensive, or not quite what you’re looking for.
7. Find a dealer
A quick internet search will turn up the dealers in your area. Asking family and friends for their opinions is a good place to start. Like pretty much everything else, car dealers are rated on Yelp, and it doesn’t hurt to check the reviews there. Getting a good dealer can be particularly important with a used car, since the pricing on used models can vary. Don’t be afraid to shop around if multiple places have the car you want — make them work for your business.
Pro tip: take the time to pay this service forward and review your experience with the dealers you work with so other consumers have access to your insights.
8. Take a test drive (or two)
This is probably the most fun part, but also the most necessary. No amount of research is a substitute for sitting in the car and making sure it fits right. Can you find a seat and steering wheel position where you’re comfortable? Are you just the wrong height so the mirrors are inconvenient? Is the seat too narrow or too broad or at a funky angle that can’t be fixed? Do you like the layout of the controls? You want to test the specific car you’re going to purchase, not just the same make and model — the very car. If you’re not sure what to watch out for, Consumer Reports has a test-drive checklist. Edmunds.com has a story on “How to Test-Drive a Car,” and there’s also a how-to from Car and Driver.
Don’t be afraid to try a few different cars. Sure, the salesman may get annoyed, but it’s more important that you’re happy with the purchase than that he is. Don’t feel like you have to buy the car that day. If you need to sleep on it, say so. This shouldn’t be an impulse buy.
9. Determine the price
Not the price the dealer wants, the price you think the car is actually worth. The internet in general, and the websites in No. 6, are a good place to start. The Manufacturer’s Suggested Retail Price (often called the MSRP or sticker price) is fairly easy to find for a new car. Internet searches can give you a decent ballpark number for used cars. Don’t begrudge the dealer a profit, but you obviously want to pay as little as you can.
10. Get it inspected
A new car will come with a warranty. If you’re buying used, have a mechanic you trust give the car a good going-over before you commit to anything.
This is probably everyone’s least favorite part, and for good reason. The salesman does this for a living. You do it every few years. Odds are he will be better at it than you are. Be willing to ask for help if you know someone who is genuinely a good negotiator. If you aren’t getting a deal you like, or they just can’t get the price down to your budget, be willing to walk away.
For some great insights on haggling over the price, check out: “Car Buying: How to Negotiate the Best Deal”
Other money-saving services available through the credit union:
- Extended Warranty – Coverage helps you enjoy your new purchase and maintain peace of mind because even the most reliable vehicle can develop mechanical problems.
- Gap Insurance – Guaranteed Auto Protection (GAP) helps pay off your remaining loan balance if your vehicle is stolen or totaled in an accident, allowing you to start fresh with a new vehicle purchase. It is also inexpensive and can be rolled into your loan payments.
- Auto Insurance – With discounts for credit union members, the TruStage™ Auto Insurance Program could save you money. It’s easy to get a quote and make the switch- even if you are already covered with another company, you won’t lose a penny! Check out the value only available to credit union members!
Have you bought a car recently, or do you have any tips to share? Share them in the comments.