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Congratulations! You are finally ready to buy your first car. Soon you’ll be out on the open road with the windows rolled down, enjoying the hum of your brand new wheels. But first, you need to sidestep that fast talking salesperson, dodge the overpriced lemons, steer clear of bad interest rates, and escape a bevy of guarantees and superfluous add-ons. Don your superhero cape and follow these tips to navigate these obstacles and get yourself on the road in no time.
The Dealership
You should spend almost as much time researching the dealership as you do the actual vehicle you buy. Be wary of slick advertising and promises to finance all applicants, and read as many reviews as possible. If one dealership has too many complaints with the Better Business Bureau, cross it off the list. Once you have the list narrowed down to a handful, visit them all. Ultimately, make your purchase from the dealership that provides you with the most attention, the most expedient help, and the best answers to your questions.
Timing
Most sales teams have their quotas set on a monthly basis and at the end of the month, many salesmen are ready to strike a bargain to reach their goals. According to USAA, you’re likely to get the best deal on a car if you shop at the end of the month. If you’re shopping for a new vehicle, the last two weeks of December are the best time to get a good price.
Financing
The salesperson standing in front of you is ready to shake your hand and let you walk out the door with your very own used car, but first, you need to sign the financing paperwork. Don’t take this decision lightly—a few percentage points can cost you hundreds or thousands of dollars down the road.
According to Bankrate’s auto loan calculator, if you buy a $14,000 vehicle on a six-year loan at 14 percent interest, your monthly payment will be $288 per month. That doesn’t sound bad, but over the life of the loan, you will end up paying more than $20,000 for that vehicle, and there’s no guarantee that it will still be running in five or six years, in spite of the loan lasting that long.
The same vehicle financed at 5 percent only costs $225 a month, and you will save more than $4,000 over the lifetime of the loan, making the vehicle’s final price about $16,000. If you can’t get a good rate through the dealership, consider recruiting a family member to cosign a loan at your bank or credit union. Avoid signing anything that you haven’t had the proper time to research.
Extended Warranty
One of the final decisions you’ll make in the car buying process is whether to purchase an extended warranty. If you like the idea of the warranty but can’t stomach the price, keep in mind that dealers aren’t the only ones who sell warranties. Companies like CARCHEX also sell extended warranties—click here for more information and explore your options. Warranties vary, but they can include anything from extended factory coverage to roadside assistance. Make sure that you understand the coverage and the full level of protection before you buy it.