15 Aug Buying a new car for the first time: our best tips
Buying a new car for the first time is one of the most stressful purchases we’ll make in our lives. With a bit of preparation, though, you can secure a quality vehicle at a reasonable price.
Below, we’ll share tips that will get you through this process in fine fashion.
Know what you can afford when buying a new car for the first time
While you might be buying a car simply to get from point A to point B, it is still important to consider what you want in a new vehicle before committing to such a large purchase.
Even if you are in the market for a basic car, getting one that has plenty of leg room, comfortable seats, an adequate audio system, and enough acceleration to easily pass slower vehicles on the freeway might be factors you’ll want to account for.
At the same time, you might want all the latest bells and whistles like satellite radio and heated seats, but these can take the final price well above what you can afford to finance on a monthly basis.
Make a list of what you need, set a target monthly payment you can cover comfortably, and then find cars that tick off as many of your boxes within that price range.
Consider external costs
The purchase price of a car isn’t the only money concern you need to be thinking about when you are in the market to buy a vehicle.
It’s easy to forget about externalities when buying a new car for the first time, like fuel economy and how much its insurance premiums will cost you each month.
A Honda Civic may not be such a great purchase when viewed through this lens, as the fact that this model is frequently stolen can cause its insurance premiums to be higher than other vehicles.
Name your price
Once you know which car you want to purchase, use information such as the MSRP (manufacturer’s suggested retail price) and the invoice price (what the dealer spends to purchase vehicles from the factory) to arrive at a number you will try to get the dealership to accept.
The more overstocked a dealer is a specific type of vehicle, the easier it will be to persuade negotiators on the other side to agree to your price.
If the vehicle you want is popular, it will be difficult to get the dealership to budge much from the sticker price written on the windshield.
Financing your purchase? Get the best interest rate you can
Unless you have tens of thousands of dollars saved up, chances are good you will be financing your new car purchase.
Don’t take the first deal you are offered, as it will be lopsided in favor of the banks and/or the dealership.
Instead, go rate shopping at credit unions, as they almost always offer the best interest rates on auto loans.
However, if a dealership is offering to finance at 0%, see if you qualify, as there is nothing better than paying back an interest-free car loan.
Car dealership owners are pros at negotiating, as they are well-trained in the art of persuasion and sales.
Additionally, the average person on the street lack the skills to push back against these tactics, and often passively accept the first deal placed in front of them.
When buying a new car for the first time, you need to ensure that you stand up for yourself – because nobody else will.
If you have a car already, start by determining its Kelly Blue Book value before trading it in – this way, you’ll know when dealership owners are trying to aggressively lowball you.
In this case, you can either call their bluff or take your business elsewhere.
When the time comes to negotiate the transaction price of the vehicle you want, start by quoting the invoice price, plus whatever extras you agreed to in your initial discussions.
This will trigger a much high counter-offer.
Offer incrementally more in response, usually a few hundred dollars over your initial price. After an hour or two of back and forth, you’ll get close in price. Hold your ground.
More often than not, they’ll go with your price.
Lastly, watch out for add-ons like rust insurance and “advertising” costs, which are often appended to the final transaction price.
Go over the fine print with a fine-toothed comb and add up all numbers with a calculator, and if anything seems fishy, don’t sign.