10 Car Buying Tips that will Lower your Monthly Payments
October 8th, 2009 Posted in Tips and AdviceReadying themselves for price slashing battle with the car salesman for the coveted “best deal” still finds some unsure and ill-equipped for battle.
Whether you are buying a new or used vehicle, most consumers only buy either approximately every 2-5 years. On the other hand, most car dealerships sell about 3-6 cars a week. Although the dealerships have skilled salesmen and the obvious advantage, you can arm yourself with education and skillfully make your next vehicle purchase smart and stress-free!
1. Narrow your choices
Decide if you want to buy a new or used vehicle, and what your budget will allow. Take advantage of the free tools available to help determine the value of the used car you’re interested in or the dealer invoice price if new. There are many websites and online calculators that can help determine what others are paying for the vehicle you’re interested in, available interest rates, and your approximate monthly payments with money down or a trade in. Most often budgets and car payments are what ultimately determine the final decision for a new or used vehicle.
2. Only buy the features you need
If you’re on a fixed budget like most of us, only buying the features that you must have can literally save you thousands of dollars and lower your monthly payments. For example, air conditioning is something most of us can’t live without, but climate control air conditioning is a luxury that most are willing to live without if the small sacrifice allows more money each month for more important family expenses. Remember that features such as power windows, power seats, audio systems, and tire packages are all add-ons that are nice, but not essential.
3. Avoid larger engines
By passing on the engine upgrade, you can save money upfront, as well as on fuel down the road. Test drive smaller engines and you may find that there is more than enough power.
4. Automatic vs. Manual transmission
There is usually a significant difference in price between an automatic transmission and a manual transmission. In fact, purchasing a manual transmission can often yield a $1000 savings or more. Additionally, manual transmissions also yield better gas mileage, averaging a savings of about 10% in fuel economy. Lastly, when it comes to repair and maintenance costs, manual transmissions appear to be superior, and cost much less to repair. However, if you prefer ease of use and like to minimize your movements while you’re driving, especially in heavy traffic, the extra money spent for an automatic transmission will prove worth it.
5. Give your trade-in some love
Gather the maintenance records, check the fluids and tire pressure, clean the inside and outside of the vehicle, and freshen it up with a new car smell. Used car managers are typically the ones who appraise your trade-in, so if it appears the car has been taken care of and includes maintenance records, you are more likely to get a better price for your trade, which ultimately means lowering your monthly payment for your new purchase.
6. Know the price range
Now that you’ve determined the type of vehicle you need, it’s important to know the realistic price you’ll most likely pay for the purchase. If it is a new car, verify the invoice price and research what others in your area are actually paying for the same vehicle. If it is a used car (and if you have a trade-in), verify the average retail price of the vehicle(s) through sources such as Kelley Blue Book or Black Book. You can also check local classifieds for used cars in your market to find out the average asking price. Keep in mind that whether new or used, they all expect to negotiate to a lower price.
7. Know your credit score
If you’re going to finance your purchase, it’s important to know your credit score. Your score determines the interest rates available to you for any loan. Take advantage of the free resources available online to obtain your credit report and score.
8. Get pre-approved for your auto loan
Getting pre-approved for your auto loan online or through another source can save time and eliminate the stress of financing through the dealer. If you’ve had credit issues or currently have bad credit, there are many free online auto loan applications offered by various loan providers. These lenders provide a quick and easy way for the consumer to shop for the best auto loan rates regardless of their credit situation.
9. Don’t lose your head
Once at the dealership, remember your research and purchase a car that you need, not necessarily one that is on the lot. Often, cars on the lot have more features than you need and are more expensive. If you didn’t include these extra features in your calculations, your monthly payments will be higher than anticipated.
10. Take your time
Reflect on car buying battles past and mistakes that may have left you feeling beaten – and don’t make them twice! It’s easy to be swayed by the more expensive features and models on the lot, and hard to remember the tight budget you face once home when the thrill of a new car purchase is over. Consider making a list of your needs and the vehicle or vehicles you can afford before you visit the dealer – then stick to your list. Because this is the second most expensive purchase most people ever make it’s important to be informed and stay focused so that you can be in control of the situation.
Congratulations! – By being informed, you braved the car buying battle and found a vehicle you can enjoy AND afford! Here are a few more tips to follow once you’re home:
- Contact your insurance company to advise of your new purchase, remove the vehicle traded from your policy if applicable, and review your coverage with your agent to be sure it meets your new needs.
- Place proof of insurance and registration in your new vehicle.
- Keep your copy of the loan documents and buyers order in a safe place.
- Maintain your vehicle according to manufacturer’s instructions; keep records of any maintenance performed on your vehicle and save all of your receipts.
- Purchase a service contract – Although many dealerships offer extended service contracts, you can often find a better price and more coverage to meet your needs if you shop independently online. Just as researching before you purchase a vehicle is important, researching companies and coverage before buying a vehicle service contract is equally important. Visit our website and blog to learn more about American Auto Shield’s services and tips for finding the best company and coverage for you.
Tags: auto, car, contract, dealership, fuel, gas, manufacturer, service, vehicle, warranty