Quick Guide: Buying a Car

Welcome to our March Blog Series!

This month, we will be focusing on specific auto topics, starting with buying a car. We chose auto as our feature topic for March because this is a very popular time to buy cars. Whether you are aiming for a tax deduction or wanting to use your tax return, we hope that our quick guide will assist you in your purchase.

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How to Buy a New or Used Car

Buying a car is on many people’s goals and to-do lists. New cars are reliable, safe, and can pose less inconvenience due to new engines, brakes and other parts. That being said, there are several things  you should keep in mind once you’ve made the decision to purchase a car.

The first thing we recommend is taking this very unique Kiplinger quiz. It will help you determine if you should lease or purchase a car. Take the Quiz!

Follow These Steps When Buying a Car

1. Do Your Research
   • Internet has helped in the car buying process because you can walk into the dealership as an educated buyer. View multiple sites to compare pricing, mileage, features and other details. A few sites to use include AutoTrader, Consumer Reports, Kelley Blue Book and Yahoo! Auto.
   • When you’re buying a new car try to discover what the “invoice” price is. This is the price the dealer originally paid for the car. For a used car, look at resale values in your area. Also, know the value of your trade-in as this can be a useful tool if you plan on bargaining.
2. Look into Pre-Financing Options
   • While car dealerships can offer financing options, a local bank or credit union might be able to offer a lower interest rate. You also can see if there are any specific “relationship” discounts. Check out MoneyAisle to see ratings on various car loans. If you decide to use a bank or credit union, make sure you have an official quote from them stating your amount. You can also use this as a way to lower your interest rate with a dealership loan.
3. Shop at Various Dealerships
   • Different dealerships offer different pricing and deals. You can also look into dealerships that are not located in your town. Vehicles might be priced differently depending on the clientele in their area.
4. Negotiate Terms
   • Purchasing a new car is a huge investment and it can impact your life for several years. Make sure you question every piece of what the salesperson offers you and answer with a negotiation. Sometimes they won’t budge but you can be surprised. It’s better to start out super low and then come to your “preferred” agreement. This “preferred” price is what you would be okay paying, but the salesperson doesn’t know that. It might help you save money on the car or even receive an extended warranty.
5. Don’t Limit Your Options
   • You may want a brand new car, but you might find a better deal on a used car. If the car is in good condition and is only gently used, you might be able to find a better make, model or one with all those nifty features for less or equal value as a new one. If you do decide to buy a used car, have a trusted mechanic view the car and provide feedback on the condition.
6. Buy Based on Purchase Price, Not Monthly Payments
   • Dealers often advertise “Buy this Car for $99.00 Monthly Payments.” That just seems too good to be true though, and sadly, it is. Normally special pricing like this has a long loan period.
   • Also, ask what added fees will be charged. You would be surprised about the various taxes, preparation, delivery fees and miscellaneous expenses a car might have.
7. Don’t Let the Dealer Know of Your Current Car
   • Wait to mention your trade-in until the end of the deal. Sometimes salespersons might use this against you…not always, but it’s better to be safe than sorry. Focus on first negotiating the car to the best price, then work on negotiating the highest amount on your trade-in.
8. Always Test Drive the Car Before Buying
   • You want to see if the comfort and overall ride in the car is smooth and pleasant. You can also do a slight test to see if everything sounds and feels normal.
     • Idle – Smooth and Quiet
     • View – Make sure you have clear vision with the mirrors, dashboard, and other important areas such as a blind spot.
     • Controls – Run a check on all of your controls to make sure everything works properly. This includes your turn signals, lights, windshield wipers, inside lights, locks, windows, radio, etc.
     • Handling & Brakes – Notice a response when you accelerate and brake. Determine the sensitivity to the handling and see if it fits your driving habits.
9. Don’t Forget About Your Insurance
   • A common cost people forget about is insurance. Purchasing a new or used car can significantly effect your insurance positively and negatively. Call your agent and ask them these questions:
     • Would a similar model cost a lot less to insure?
     • Do I have to buy collision and comprehensive coverage?
     • Should I buy gap insurance?
     • Are there many insurance claims for passenger injuries in this car?
     • Should I get coverage for vehicle theft?
   • You can also ask for a quote on what purchasing a certain car would change your premium to. Call us today at 513-984-5255 with more questions. We have your answers.

Sources: Forbes, MoneyCrashers

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