No matter what your reason is for needing a new automobile, finding the make, model, and features to suit your needs is only half the battle. It’s not all horsepower and handbrakes—the process of buying a car can be intimidating with a lot of numbers, negotiating, and paperwork involved. But as they say, the pen is mightier than the sword! Here are a few tips for buying a car to help you wield that powerful utensil with confidence as you sign for your next vehicle purchase.
How to Decide Between a New or Used Car
In an apples-to-apples comparison, new vehicles tend to have better gas mileage than older second-hand cars. The reason is that the U.S. government has raised mpg, or mile per gallon, expectations in regulations such as the Corporate Average Fuel Economy (CAFE) standards. In 2016, the standards updated to averages of 39 mpg for cars and 30 mpg for trucks, up from the previous 25 mpg average in 2009 for all passenger vehicles.
However, the lower sticker price on a pre-owned car can be enticing compared to the higher MSRP, or manufacturer’s suggested retail price, of a new one. Another good reason to buy used is if the automaker discontinued the model that you want or you’re looking for a classic car.
Standard vs. Extra Features
Most new cars come with a whole book of standard features and possible upgrades, such as power everything, smartphone compatibility, and leather seats. With a second-hand automobile, there are not as many options that you can add because the manufacturer’s features were already selected by the first owner. In either case, dealers will likely offer you additional features, or ‘extras,’ that they install at the dealership—or put in writing if it’s an intangible like an extended warranty or gap insurance.
Not only are new cars more customizable than used ones, but they also tend to have more comprehensive standard features than in the past. In fact, hand-operated roll-down windows instead of electric windows, for example, would be a custom option on most modern automobiles—if they’re even available. Manufacturer upgrades have likewise evolved to include such advanced features as rear-end back-up cameras and safety systems with automatic braking to avoid collisions. It’s a good idea to do your research ahead of purchase time on these features and what they should cost so that you won’t be surprised with a higher price than you intended.
How Do You Buy a New Car?
First off, you’ll need to shop around and compare dealer invoice prices to ensure the best deal on your new car. Once you’ve signed the buyer’s order, which legally commits you to buying a car, and start the financing approval paperwork, things can get complicated if you change your mind.
What Is the Invoice Price of a Car?
Here’s where learning a bit of auto industry jargon can go a long way. Whether the car that you’re considering is new or just new to you, you don’t want to overpay. Concerning new cars, that’s where the ‘invoice price’ comes into play.
New car invoice prices represent what the dealership originally paid the manufacturer for the vehicle. Well, not exactly—typically, the manufacturer offers the dealer discounts and incentives to sell their cars, and those figures don’t appear as part of the car invoice price. While it’s unlikely that you’ll walk away with dealer invoice pricing for your new car, knowing those numbers can really help at the bargaining table.
A parallel for used cars would be the wholesale price or a major automotive pricing guide’s valuation.
Pre-approval for a car loan can be a great tool in the negotiation process. Doing your own car loan research before visiting a dealership will especially help you to get the best auto financing rate. Don’t share the exact numbers, though—decide ahead of time what you can afford and keep the rest of the details to yourself if you’re not comfortable with spending that much. Dealers only need to know that you’re creditworthy and a serious buyer with a bottom line.
Stick to Your Budget
Figure out how much you can afford for a monthly payment, but just like with your pre-approval amount, keep it to yourself and start a bit lower. Stay firm when negotiating car price, and be prepared to walk away from the table if an offer doesn’t meet your terms rather than getting in over your head. Oftentimes, dealers will be able to find you the car that you want and that’s in your price range once they better understand your wish list and budget limitations.
Of course, be polite and friendly to the salespeople, too. No matter how well you’ve prepared, those people have probably been working at the dealership for years. They’ll know the ins and outs of car finance and the behind-the-scenes car-buying process.
What Documents Do You Need to Buy a Car?
When it comes to buying a car tips, knowing what to grab from home before leaving for the dealership will save you the most time and headaches. Important items to bring include your driver’s license, another official document or mail with your current home address, and a bank statement or paystub for proof of income. If you’re trading in your old car, you’ll also need its title, and you should grab the proof of insurance from the glove box so you can transfer the coverage to the new automobile.
By the way, if you don’t like the tires that a vehicle comes with, be sure to add the upgrade to your negotiating terms. You can shop for tires at RightTurn.com to find out which tires best suit your driving needs. Just print out the details or pull us up on your smartphone to discuss the tire swap with your automotive dealer.
Do you have any tried and true tips for buying a car of your own? Post a comment and share your knowledge.