For the majority out there, cars are the second biggest expenditure after the house. It doesn’t matter if you are a wheel freak or someone who loathes driving a vehicle. Having a car is a necessity in this age, given how cities are growing.
According to the cars guide report, the population of the world is 7.6 billion. There is an estimation of 1.4 billion cars on the road. It puts the vehicle saturation at 18 percent.
These days, cars have enhanced safety features and more tech gizmos than vehicles from a decade ago. No wonder the prices in the automobile sector are reaching the skies. Impulse buying in this sector may burn a hole in your pocket.
We suggest you devise a solid financial plan when buying a car. Meanwhile, scrutinize all purchasing options available in the field. A study by Autotrader reveals that walk-ins remain a common form of initial contact with a dealership by over half of the car buyers.
Therefore, to hit a financially sound deal while you are on this endeavor is crucial.
Whether you are buying a car online or through a dealership, you can save a lot of money if you know a few smart tricks. In this blog, we have mentioned six tips you should know to buy a car like a pro.
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#1 Get Preapproved for a Loan
A preapproved best car loan is a loan you receive from the bank or credit union heading out for car shopping. Some agencies go to the extent of giving a voucher or a check with the amount you can use when paying for your vehicle at the dealership.
Gaining a pre-approval ensures that you get the best possible rates in the market. Most lenders have online calculators to give you an estimated rate. They inquire about the type of car you want, your credit score, and the amount you can pay each month. Even if you have a bad credit score, you can still get a loan with a company like bad credit car loans, so it's worth shopping around. In case you ask for a quote directly from the dealership, there is a little chance that you get the best value.
Phillip Reed, the autos editor at personal finance site NerdWallet, believes that getting preapproved also reveals your credit score problems. It points out if you should build up your credit score or weed out the erroneous information from your report.
#2 Learn to negotiate
If you buy a car from the dealership, reveal the necessary information only. Exposing too much to the salespeople may cause hindrances during negotiation.
Even if you are not a haggler by nature, there is always room for a bargain when shopping for wheels. The salesperson at the store will often want to know if you plan to trade in for another vehicle or get a loan through the dealership. Experts recommend not answering these queries. Because if you negotiate a reasonable price for the car, they might increase the interest rate or lowball you on your trade.
Once you settle on the final price, it is time to do some homework. A little research can tell your trade worth in ballpark terms. You should check out the pricing at NADA.com, Kelly Blue Book, and Edmunds.
If the discussion with the salesperson doesn’t seem to take a favorable turn, there is no harm in walking away. There are plenty of other dealerships that you can visit.
#3 Focus on the Features
When looking into your options, we suggest emphasizing the features instead of being specific about the brand. Some cars may not fulfill your needs despite being loaded with modern features.
An alternate option is to look into the used car market. The reliability of used vehicles nowadays is higher than ever before. There is a ceaseless river of cars coming off at three-year leases and in good shape. At times, even cars older than that are also worth a shot.
If you plan to buy a car online, then the job will become easier for you. One of the various benefits of buying online is that you can easily run through the dealership’s reviews. You can also visit several dealerships in one go without even having to leave your chair.
#4 Beware of Long-term Car Loans
About a third of car loans offered are for more than six years. Note that a six or seven-year-old loan means lower monthly payments than a five or four-year-old loan. But it means paying a lot more money as interest.
Newbies in the landscape often do not realize this. Consequently, they end up paying more over time. A better way to go about this is to opt for a five-year loan for a new car.
With a used car, we suggest you finance it for three years. One reason for this is that a used car may break down beyond repair in three or fewer years. You are more likely to have paid off the loan by that time.
#5 Put 20 percent down
Along with the short-term loan, you should avoid all situations where you may end up owing more money than the real worth of the car. Do this by putting some money down.
This goes without saying that dealerships don’t require buyers with good credit to make any down payment at all.
The idea of driving off in your new wheels is tempting but comes at a cost. In case you suddenly come across circumstances where you have to sell your new car, you cannot do it if you owe more on the loan than the car’s worth. A sizeable down payment guarantees that this will not happen.
#6 Pay for fees, taxes, and extras with cash
Do not finance the miscellaneous expenses in your vehicle purchase like registration fees, sales tax, documentation fees, and extras. Dealers often roll all or some of these expenses into your total cost.
Doing that ensures you will be upside down on your car loan. It goes on for at least a while, as you are increasing the loan amount but not the car value that secures the loan.
Ending Remarks
Driving off, knowing you got a killer deal, feels fantastic. All you need is to make a bunch of smart moves and save thousands on your purchase.
It is not uncommon for people to assume they have hit a jackpot deal to discover later that they were severely deceived. We hope our tips helped you avoid such unfortunates, and that you work out a terrific deal on your desirable vehicle.
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