Are you in need of a new car? There are many things to take in consideration while searching for a new or used car. One of the most crucial things to consider is how you will finance it.
Get Pre-Approved.
This is probably the most important thing you can do. Don’t wait until you get to the car dealership before you find out how much you can afford.
A lot of buyers mistakenly go with the view that the dealership has all the financing know-how. They have the resources and the connections, so customers say they’ll just speak to the dealer. There are problems with that thinking. Dealers take advantage of this.
You Can Find Errors With Your Credit If You Pre-Qualify.
When you pre-qualify, you’ll have the opportunity to get any erroneous information off of your credit score before you head to the dealership.
Pre-qualifying also means that you can get the chance to build up your credit score before you head over to the dealer.
If you get pre-approved, you head to the dealership with an ace in hand. With that in mind, you should get pre-qualified with a mainstream organization like a bank or credit union. Make sure that the lender is known and reputable.
When You Get To The Dealer, Keep It Simple.
Don’t arm the sales person with too much information. A good Poker player never reveals his hand too early, right?
The sales person will probably ask if you’re going to trade a car in. They’re also likely to ask if you want to get a loan through them. It is recommended that you do not answer those questions. Remember that you’re up against a trained sales person. They can talk you down on the value of that car you’re trading in. They can hike the interest rate on the new car loan. They know how to confuse you. They’re under pressure to make money for the dealer. They’re also getting their commission. They’re good at what they do. Don’t play by their rules.
Settle on a price for the new car first. After doing that, you can talk about the trade-in value.
What About That Trade-In?
Do your homework before you go to the dealership. Do some research and get at least an idea of what your old car is worth.
Some good sources for doing this are edmunds.com, Kelly Blue Book, and NADA.
Don’t be afraid to walk off. The dealer might be low-balling. Maybe they aren’t giving you a good price.
Watch Out For Those Add-Ons.
Okay, you’ve gone through a lot already. You agreed on the new car’s price. You’ve accepted the trade-in value for your existing car. You’re off to the office of the finance manager. Now you’ll get their sales pitch regarding protection plans and extended warranties. They might get into what is called gap insurance as well. This is where dealers make a lot of their profits. You’re tired. A lot of this is overpriced. Customers don’t know how to figure out what a fair price is for all this.
It’s a good idea to simply say “No” to all of that. They usually get you by saying things like “You get all of this for just a little more!” That “little more” can add up quickly.
You can always buy that extended factory warranty later. However, if you decide to get it, you need to get it before the existing warranty ends. That said, you don’t have to get the extended warranty where you got the car. Shop the other dealers in your area. Get the best price.
Lastly, Avoid A Car That’s Too Expensive.
The car payment should be 10 to 15 percent of your take-home pay.
