Buying a new car is one of the biggest purchases you’ll ever make. According to Kelley Blue Book, the average transaction price was $34,648 in August 2017. As soon as you step on the lot, car dealers will try to talk you into buying a more expensive vehicle because the more you spend, the higher their commission. Here’s what you need to do to avoid being taken for a ride.
Do your research
Before visiting any dealerships, research cars in your price range. Kelley Blue Book, Auto Trader and Consumer Reports are all good places to start. The goal is to find the invoice price, not the manufacturer’s suggested retail price (MSRP). The invoice price is what the dealer paid for the car which is usually thousands less than the MSRP. Be sure to also research the market value of your current car if you plan to trade it in. All of this information will come in handy when it’s time to start price negotiations.
Get your own financing
Dealership finance departments are known to markup interest rates. Their bank may agree to finance your loan for 3 percent but they’ll tell you a higher percentage so your loan will be more profitable for them. Find out the going rates at your financial institution and see if you qualify for any special discounts. Anytime you obtain a quote, get it in writing. This will allow you to present the quote at the dealership and help you negotiate a better interest rate.
Negotiate the purchase price
Always negotiate the purchase price of the car instead of the monthly payments. If you tell a dealer you want a certain monthly payment, they’ll just extend the terms of your loan until they reach your target price. Not only will you pay more in interest, you may buy a car that’s more expensive than you anticipated.
Go for a test drive
You can read all the reviews you want but you won’t know if a car is right for you unless you drive it. Go for a spin and make sure it’s comfortable. If you have small children, bring their car seats to make sure it fits. Other key areas to focus on are the vehicle’s acceleration, braking, steering and handling, quietness and visibility.
Skip the extra bells and whistles
Heated seats, back-up cameras and navigation systems are nice but they aren’t vital additions. Loading up on extra features can cause the purchase price to skyrocket so keep the add-ons to a minimum or skip them completely.
Don’t buy the extended warranty
Extended warranties and service plans offered by dealerships are expensive and often times the coverage is limited. Since some cars have a reputation for being unreliable, research your desired vehicle and see if the extra protection is worth it. If you’re buying a new car with a reliable history, skip the additional coverage.