Purchasing a car is a big investment, so be sure that you avoid costly car buying mistakes. If you’re careless and buy on impulse, you could severely compromise your finances – something you wouldn’t want in these days. Here are some auto loan tips:
Know what you need – Remember that on ordinary roads and everyday traffic, practicality and reliability trump style and appeal.
For example, convertibles look good. Unfortunately, they have a low load limit, usually have a stiffer ride and are quite thirsty for gas. For everyday use, these types of cars can be costly. You can also expect higher insurance premiums for them. It’s always best to think about what you need in a car more than what you want.
The same goes for many of the extras that dealers offer. For instance, dealers may offer you a navigation system that is stunning to look at and easy to use. But if it will cost you an additional $2,000, will it really be worth it when a portable GPS can be purchased for around $150 to $200? If you want to help yourself, drop the unnecessary extras.
Know the average price paid – Slashing $1,000 off the MSRP may sound like a good deal, but if others are able to slash off more than that, then you weren’t able to maximize your savings. The internet makes it easy to research the average price paid by consumers. This will give you an idea of the price you should be negotiating for.
Maximize the value of your trade-in – If you’re trading in your old vehicle, be sure that you get a reasonable price. Never take the dealer’s word for the value of your old car. Consult NADA guides to determine a reasonable price range for your old car, so you know if you’re getting a fair deal.
In addition, don’t mention that you’re planning to trade your old vehicle in during the negotiation. It’s always wiser to secure a good deal first for your new car before mentioning your option to trade-in. In doing so, you ensure that the trade-in value of your old car is factored into the final price you’ve already agreed upon.
Look at the big picture – Many people negotiate deals based on what gives them the lowest monthly payments. Unfortunately, a lower monthly may mean a longer auto loan term, which usually leads to higher interest costs and fees in the end.
Sign up on the box at the right for further assistance in buying an economy car.
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