In an effort to pay back our student loans before we celebrate our one-hundredth birthday, my husband and I have been putting off buying a new vehicle for quite some time now. In fact, we only just started to *think* about it when my husband came home literally dragging his wheel well beneath the car. Surely a wheel well isn’t incredibly necessary? We could definitely put it off for the summer right? It wasn’t until we noticed one of the two brackets holding our gas tank in place was hanging by a thread that we decided it was probably time to purchase a new vehicle.
It’s not that I have anything against purchasing a vehicle per say. In fact, I’ve been down-right spoiled with the opportunity to drive a few of the latest models on the market. But the car buying process seemed so daunting. The loan applications, the haggling, the test drives. But alas, for the last week we have found ourselves doing just that. As our car buying process comes to a close this week, I wanted to share with you some car buying tips, especially these 5 car buying tips and things you should do before you even set foot in a dealership.
Know Your Credit Score
Your credit score plays a large factor in the type of vehicle you can afford, the interest rate you will get and the amount you will pay each month and in for the vehicle in total. If you have a good credit score gives you the freedom to walk into the dealership with good negotiating power and you can usually drive a new vehicle for little money down. If you’re credit score is average, or less than average your lender may require a certain percentage down and the higher interest rates have greater impact on your overall monthly payment. Taking a look at your credit score and credit report also gives you the opportunity to clear up any errors and take care of outstanding debt that could affect your loan process. Make sure tackle any collections reported on your account (find tips here) and submit any discrepancies to be corrected.
Get Pre-Approved for an Auto Loan
If you have a good relationship with a financial institution like your bank or credit union, you may want to prequalify yourself for an auto loan. Getting pre-approved for a car loan is a good idea for a number of reasons. It makes negotiation easier, lets you know what you can afford and puts interest rates in perspective. If you decide to skip this step, you should at least use an online car payment estimator to determine the monthly payment of a vehicle based on it’s MSRP.
Create a Budget
Just because you prequalify for a certain loan amount, doesn’t mean you need to take all of it. Many of us have circumstances that are not taken into consideration when given a loan. The best way to know if you can actually afford the total amount you have been approved for is by setting up a budget. Don’t forget to include incidentals like clothing allowances, date nights and little extras that add up quickly.
Once you have a price point in mind the next logical step is finding a vehicle that suits your lifestyle and your budget. The new year is prime time for automakers to release their newest models at the auto shows. Consider heading over to your local auto show for a now pressure viewing experience. Then you can use online services that offer new car comparisons side by side to find potential contenders. It’s always good practice to have an idea of what you want in your head before you arrive at the dealership. Not only does it help shorten the amount of time you spend on the final purchase, it helps to prevent you from being talked into a vehicle that really isn’t a good fit for you.
Shop Around Online
Shopping around online allows you to compare the selection and price range of numerous vehicles without the added pressure of a sales man standing beside you. Plus, knowing competitors pricing gives you an advantage in the negotiating process. My husband was able to get a higher trade in value and additional discounts on his vehicle purchase simply by comparing Kelly Blue Book Values and shopping around between dealerships. For instance, we received quotes from two dealerships that were owned by the same person and sold vehicles from the same automaker. However one of them offered us a greater trade in value and a lower price point for the exact same vehicle. It pays to shop around!
This post was written as a partnership, but all opinions remain our own.