If you’ve opted to buy a new car rather than a used vehicle, you have several advantages. You know the history of the car when you buy a new car, rather than having to worry about how the previous owners have treated it or what the dealer’s not telling you. Plus, you get to take home a shiny new car. The main disadvantage when you buy a new car is the cost; new cars are substantially more expensive than their used counterparts.
Budgeting to buy a new car:
The first thing you’ll want to do when planning to buy a new car is create a budget to determine how much money you have with which to buy a new car. Allow for interest and insurance in your budget. Allow for a down payment when you buy a new car as well. Plan to pay as much down as you can, since paying more down when you buy a new car will get you a lower interest rate, and will allow you to take out a smaller loan, saving even more interest.
Prioritizing before you buy a new car:
After you have decided how much you can spend to buy a new car, make a list of features you must have in a car, and features that it would be nice to have, in order of importance. If you order your priorities, you can avoid getting talked into paying extra for features that aren’t important to you (dealers are great at talking customers into things, it’s what they do for a living)!
What to do with the old car when you buy a new car:
You’ll also want to decide, in advance, what you want to do with your old vehicle when you buy a new car. Your options include: selling it yourself, trading it in wherever you buy a new car, or donating it to charity. Selling the vehicle yourself will get you the most money, but it can also take a long time and become a hassle for you. Trading the vehicle in is much more convenient, but the dealer will give you the lowest price possible. Donating the old car to charity is a good option if you don’t think the dealership will give you much for a trade-in and you don’t want to deal with selling it yourself. You get a tax break based on how much the donated vehicle is worth.
Financing to buy a new car:
Since you’re probably going to be paying interest when you buy a new car, take the necessary steps to make sure the amount of interest will be as low as possible. Compare rates. Don’t make the dealership where you buy a new car your only financing option. Usually a bank or credit union will give you a better deal. If your car is very expensive, look into paying for it with a home equity loan. The rates available on home equity loans are lower than auto loan rates. One last tip: get financing options in place before ever going to the dealership. Get pre-approved for loans in the amount you are planning to spend when you buy a new car.
At the dealership:
Don’t be afraid to haggle price with the dealer when you buy a new car. The dealer will have a range of prices they are allowed to sell the car at, and the first price they ask will be the high-end price to see if you fall for it. You may even want to look at pricing for similar cars online to see how the bargain you are being offered measures up. Tip: If you are in a big hurry to buy because your old car broke down, or another similar reason, don’t let the dealer know. It will put the bargain on his terms.
You should have fun when you buy a new car, rather than letting it stress you out. We hope this outline helps minimize the stress and maximize the fun when you are in the market to buy a new car.
By Riannon Cutler