Buying a new car – whether it’s first hand or second hand – can come with a lot of uncertainty and anxiety. A car is a major investment; you don’t want to waste your money on something that won’t do its job properly, or worse, needs to be replaced sooner than you can afford.
Here are 15 essential tips for buying a car, with advice for new and used vehicles.
Do Your Research
If you’re buying a new car, try to find the “invoice” price of the vehicle. This is different to the MSRP, which is what the dealer charges you. The invoice price is what the dealer pays the manufacturer or distributor. Having this information can help you haggle over the price during negotiations.
When buying a used car, look around for the average price your particular make and model is going for. You should be able to find a wide range of prices online and work out what the usual asking price is. This goes for if you plan to trade in a vehicle during the transaction as well.
Don’t Get Dealership Financing
Dealerships will typically have the worst interest rates on a car loan. Instead, go to a bank or credit union. Their rates are usually lower and more competitive. Get a quote in writing for your offer; if you must go to the dealership for financing, you can use the bank or credit union quote to negotiate a better interest rate.
Avoid Impulse Buys
Unless you’re in an emergency for a new vehicle, shop around. Visit different dealerships, collect competitive prices, and see what the best possible deal is. Impulsively buying a vehicle that you like can lead you to making a bad call – especially if you’re buying a used vehicle and don’t take the time to get it checked thoroughly.
You should even try shopping for a car in a different town or city; the same dealer might sell the same make and model for notably different prices depending on the location the dealership is located.
Negotiate Your Terms
Car salespeople have a poor rap when it comes to selling tactics, but it’s unfortunately a well-earned reputation. It’s their job to sell you as much as possible for as much as possible. They’re not here to give you the best loan at the best rate for the most discounted vehicle on the lot.
So be prepared to try to negotiate. Negotiate the price, the loan, the loan terms. Stick to your guns, be confident, and above all – don’t be afraid to walk away. No matter how much you like the car, you’ll probably be able to get it elsewhere. Being comfortable walking away from a deal gives you the power to fight for the best outcome possible for you without compromising.
Go By Purchase Price, Not Monthly Repayments
It’s all too easy to get misled about the cost of a vehicle based on monthly repayment amounts. If you’re getting financing from the dealership, this is exactly what they’ll try. But that really attractive monthly repayment isn’t going to look so nice when it’s spread out over 72 months.
Do your negotiations based on the total purchase price – the cost of the vehicle, the cost of interest, hidden dealership fees, etc. Know the actual amount of money you’ll end up paying by the time you own the vehicle in full, and negotiate based on that price.
Negotiate the Price, Then Mention Your Trade In
If you’re looking to trade in an existing car when purchasing a new one, don’t mention it. The salesperson you’re talking to likely has a bottom limit they’re willing to go to sell the car. If you don’t mention the trade-in, you’ll be able to negotiate down to that price, then get the discount on top.
For example, you’re looking at a car that costs $24,000. The dealer would be willing to take it down to $20,000 (not that they’d tell you.) You have a car you want to trade in worth $2000.
If you start by saying you’ve got the trade-in, the salesperson will likely take the cost down to $22,000, minus the trade-in for a total of $20,000. But if you only tell them about the trade-in after negotiations, you could get the car for $20,000 minus the trade-in, for a total cost to you of just $18,000.
Don’t Forget Insurance Costs
When you buy a vehicle, don’t forget the price of insurance. Get a quote for the expected premiums on the make and model of the car you’re looking for. Different types of cars have different insurance costs – sports models are dearer to insure than a regular 4-door sedan. However, a Toyota Camry is a popular target for thieves because of its high resell value – and so it comes with higher insurance premiums as well.
The cost of insurance will be a long-running expenditure, and can quickly take a car from being just affordable to outside of your budget. Check first and factor it into your budget before you sign the dotted line.
Get a Car History Report
If you’re buying a used vehicle, get a comprehensive car history report. This report will give you critical information about the car’s history – where it came from, registration status, stolen status, whether it’s ever been written off, whether there’s any money owing on it. All of these things can help you avoid buying a dodgy second-hand vehicle that hasn’t been paid off and could be repossessed at any time – or worse, buying a stolen vehicle.
Visit revscheckreport.com.au and enter the car’s VIN or rego number, pay a small fee, and get this vital piece of information in just minutes.