Buying a New car can be a stress free, easy process IF you do it the right way.
Here are Ten Steps to help you with your New Car purchase. If you have any questions about this process or if you need advice on how to do it – simply give me a call at (413) 543-3800 and I will be glad to help you.
Step 1. Determine Your Budget
- Budget your income and expenses to determine how much you can afford – This is important with your car purchase. Chances are you will have a loan for 3-5 years – so be sure you can safely afford the car payment, expenses and car insurance each month.
- What Expenses to Expect when you Own a Car – Title, Registration, excise taxes, gas, oil and maintenance.
- Down Payments – For a new car you should put at least 20% down. This builds equity in the car and keeps your monthly payments reasonable. Pay down payments by credit card – not cash.
- Learn How to Value Your Trade In – If you need help with this call my office and I will assist you.
- Take Control of the Car Buying Process – Buying a new car is a simple process – but YOU must control the transaction – if the dealer controls it you will lose. You are the boss – just follow these steps and you will be in control.
- What the Car Dealer is Thinking – They are thinking that they want to make as much money as they can from your car purchase. Therefore you must know what you are doing and do it with confidence. They are trying to charge you the most you can – and you are trying to pay the least you can. Remember this.
Step 2. Determine the Type of Car You Want to Own
- Interested in Good Gas Mileage? Get a four cylinder – great on gas.
- Two Door or Four Door? Kids? No Kids?
- Transmission – What type do you want? Automatic? Or manual?
- Research the Safety of the Vehicle – Enter your vehicle and look at the safety ratings.
- What Options do you Want? Security System? – Options will effect your price. Look at the options available and choose which you would like to have.
- New Car Searches and Reviews – Search for your new car online. Use this trusted link for info and reviews.
- Get Car Insurance Quotes – Once you determine what car you want, call around and get auto insurance quotes for Full Coverage – factor this amount into your budget.
Step 3. Arrange for Your Financing
- Apply for Your Own Financing – Before you go to the Dealership – Unless the dealer is offering 0% interest or 1% interest (you must have a great credit score) get your financing outside of the dealership. Try your bank or a credit union – then you can shop as a “cash” buyer and not let the dealer use their financing to make even more money off of you.
- Bad Credit No Credit Financing – There is financing available for you but it is high interest rates. If you need to do this, be sure to pay your first eight months right on time, then you can search out refinancing to lower your interest rate.
- Taxes on Your Vehicle – Be sure to factor this into your final price. Discuss this with the dealer once you negotiate your deal – you want to know the “out the door price” including fees and taxes – no surprises!
- Learn about Gap Insurance – If you do not put 20% down or anything down you should consider Gap Insurance. This is insurance that covers the difference between what you owe on the car and what the insurance company is going to pay out if the car is totaled. It is not expensive and provides good peace of mind.
- Leasing versus Financing – If you drive very little – say under 12,000 a year then Leasing could be a good option. It is like renting the car for three years – you can buy it out after three years or simply hand it back into the dealer. With Financing after the loan is paid in full you own the car. Up to you.
Step 4. Go to the Dealer to Test Drive the Car
- Why go to the Dealer? Only to test drive the car – do not negotiate at the dealership or you will lose every time.
- The Car Sales Person and Sales Manager – They want to sell you the car that day. They will do all they can to have you sign the paperwork and put a down payment. You must resist this. Just politely tell them you want to just test drive the car and you will get back to them if interested.
- What to do at the Dealership – Test drive the car you are interested in, get the sales person’s business card and leave. Do not put a down payment – you must first research the car and get online pricing.
- What to Expect at the Dealership – Pressure. They will want to sell you the car that day – that very moment – but you must resist this. They may try to have different people talk to you – but just be polite and tell them you just wanted to test drive the car and that you will get back to them.
- Should you Buy based on Monthly Payment? Never! Do not fall for this trick. They will ask you “How much were you looking to spend on a monthly basis”? Just tell them you would rather discuss the price of the vehicle – test drive the car and leave.
- The Test Drive – How to Act and What to Look For – Drive with the radio off. Is the car comfortable? If you love the car do not let them know it. Does it run smoothly? Does it feel solid? Sit in the back seat. Is it roomy? Check out the trunk. Take your time and be sure it is the car you want and need.
Step 5. Get Online Quotes for the Car You Want
- New Car – Online Price Quotes- This is how to save money – even thousands. True Car is the best way to buy a new car. Go through the quick steps and you will get a “Target Price” and under that you will see”Factory Invoice” – this is the price that you want to shoot for. If you can get a new car for close to this price – you are way ahead of the crowd and you just save thousands on your new car purchase!
- New Car Incentives and Rebates – Once you know the car you want – look it up to see if there are additional Incentives and Rebates to lower your price or get great financing.
- What to Do After you Have your Invoice Price – Now that you have your approximate price look up dealers in your area. It will give you all the dealers in your area – within five or ten miles. Then call them (3 or 4 of them) and ask for the “Internet Manager” – when he/she gets on the line, ask for their fax number or email, thank them and tell them you are going to send them an offer.
Step 6. Determine Your First Offer to the Dealer
- New Car First Offer – How to Determine this Amount? – $500 less than “Factory Invoice” is a good place to start – this is your first offer.
- Dealer Fees – Which are Legit and Which are Bogus – Read this info and learn about possible dealer fees. In my opinion the only Dealer Fee that is legit is the “Destination Fee” – all others should be argued against.
Step 7. Contact the Dealer and Make Your Offer
- Make your Offer from the Comfort of Your Home or Office – Now that you have the fax numbers and/or email – send your offer amount to each Internet Manager. Tell them you would like to offer $_______ for the vehicle (describe it exactly how you want it including all options, color etc) . Tell them this is your “out the door price including all fees, tax not included. Sit back and wait for the replies.
- Let Dealers Compete for Your Business – Once you get the replies – chances are one of the dealers will come pretty close to your offer. Then take the lowest price and resend your fax/email to the Internet Managers – telling the dealers you have an agreed on price and you are writing to see if they are willing to beat it.
- Get the lowest price, call that dealer, finalize the price – you have it in writing and arrange a time to go sign the paperwork.
Step 8. Present Your Trade In – If You Have One
- How to get the Most Money Possible for your Trade In – Sell It on Your Own with Auto Trader or CarMax or Craigs List. You will get more this way than having the dealer buy it from you. Or put an ad in the newspaper – there are many ways – bottom line is that if you sell it on your own chances are you will get more than if you trade it in to the dealer.
- When to Tell the Dealer you Have a Trade In – After you have negotiated a price for your new car.
- Know Your Trade In Value – NADA or KBB
- Tax Advantage of Your Trade In – If you trade in your used car when you purchase a new car – it reduces the taxable amount. For example, if the new car cost $25,000 and your trade in is valued at $5000, then you only pay taxes on $20,000. Something to consider.
Step 9. Pick Up Your New Car and Sign the Paperwork
- Picking up your New Car – How to Prepare – Print out your agreed price from the dealer, have your financing already approved – if done outside the dealer, have the Internet Manager give you the final price including taxes and fees and have Cashiers Check ready to go for that exact amount. Have your insurance agent ready and waiting for the paperwork.
- Your Second New Car Test Drive – Ask the dealer to show you the car again and thoroughly check the interior and exterior for any damage. Then go for a quick test drive again without the radio on.
- The Finance Sales Person – How to Prepare – Watch out! This is the best sales person they have. This is where they try to wipe out all your hard earned savings. Politely tell them you have already negotiated the price and that, at this time, you are not interested in any extras.
- The Paperwork for your New Car and What to Look For – Be sure that all the information is correct – name, address, price and that there are no additional fees or charges added to the deal.
- Car Dealer Problem Resolution – Attorney General (413) 784-1240. If you have any problem with a dealer just mention to them that you will contact the Attorney General – this usually gets action. The Attorney General over sees all dealer licensing.
- Lemon Laws – These apply to New Cars only not Used Cars.
That’s it! Follow these steps and you are guaranteed to save money on your next New Car purchase.