A Guide To Buying New Cars
If you've ever went to dealership to buy a new car, you know the experience can be both exciting and nerve racking at the same time. You experience the great feeling of buying a brand new car, maybe even your dream car, and you also experience the dread of dealing with car salesmen and the car buying process.
Our new car buying guide will educate you so that you can get the right car that is right for you and also so that you can a good deal on your brand new car and not get taken advantage of.
Auto Dealerships Laws
Every state requires that auto makers to sell their new cars through franchised dealers. They also award exclusive territories (except Maryland) to dealers and prohibit auto makers from terminating franchises with existing dealers unless prove that they have a "good cause" to do so.
Because of these laws, new cars can only be bought and sold through franchised auto dealers which often leads to high pressure sales tactics. This of course is not good for you, the consumer. Luckily for you though, by the time that you go to buy your brand new car, you will be an educated consumer that will be able to get the best deal on that brand new car that you want.
Get An Auto Loan
Most people that decide to buy a brand new car do not have the money available to pay cash for a brand new car. This means that most people will either have to get a loan or get financing through an auto dealership.
The first thing that you should do once you have decided to buy a brand new car is to try to get approved for an auto loan from a credit union or a bank. In general, credit unions offer lower auto loan rates compared to banks. Getting an auto loan from either a credit union or a bank will not only mean that you qualify for a lower interest on your loan, it also means that you can negotiate when buying your brand new car as a cash buyer at an auto dealership. Buying a brand new car at an auto dealership as cash buyer makes it much easier to purchase your brand new car and it also puts in a better position to negotiate a better deal.
If you are not able to get an auto loan from either a credit union or a bank, you can still get financing through an auto dealership. However, getting financing through an auto dealership will mean that you will pay a higher interest rate than if you were to get an auto loan through a credit union or a bank.
Set A Budget
The average price of a brand new auto that is sold is about $30,000 dollars and that does not include the cost of insurance, tags and title, warranties, etc. Also, the average new car loan is 67 months. For most people, that makes it the second largest purchase or expense, behind a mortgage or rent. That means that you should make a budget before buying a new car.
Many people associate unpleasant feelings when they think of the word "budget", but it's something that you should do before you start shopping for a new car. At the same time, many people want or have their heart set on a car that they can't realistically afford. In other words, it's not within their budget.
Some general rules for setting your budget when buying a new car are:
- Have your payments be 15% or less of your take home pay.
- Limit car loans to 48 months or less.
If you can not have your payments be 15% or less of your take home pay, I would recommend that you save for a downpayment until you can.
With regard to the terms of the loans (how long the loan is for), some people prefer to have a longer loan term to lower the monthly payments, you should keep in mind that the longer the loan term, the more interest you will pay.
You can use our auto loan calculator to help you set your budget.
If you can't have your payments be 15% or less of your take home pay or have the terms of the loan be 48 months or less, you may want to save up for a downpayment (or a larger downpayment) or choose a new car that is within your budget.
Choosing A Car
Choosing what new car to buy is usually a combination of your needs and wants. Each person's personal and financial situation is unique. That being said, some common questions are:
- Do you have a family? If so, how many and what ages?
- What type of driving will you be doing: highway, stop and go, off-road, etc.?
- How much parking space or garage space do you have?
- How much cargo capacity do you need?
- Do you want and automatic or manual transmission?
- What safety features do you want?
When you have narrowed down your choice of which car to buy if you haven't already, it's a good idea to read some online reviews. Of course you should not put all of your faith on online reviews, but they can generally give you an idea of what to expect.
Video reviews, mainly on youtube, can also give you a very good idea of what to expect from a car.
Test Drive
Once you have chosen or narrowed down your selection, it's time for a test drive.
The first to do is to just sit in the car. Get a feel for how you feel and whether it's a good fit for you. After all, you'll be spending a lot time just sitting and driving your new car.
After you've settled in and gotten comfortable, some questions to ask yourself are:
- Is it easy to get in and out of the car?
- Are you comfortable?
- Is there enough legroom?
- Is it tall enough so that you don't hit your head when getting in?
- Is there enough room for your butt and hips to sit comfortably?
- Can you adjust the seat to your liking?
- Are the controls and gauges easy to read and use?
- How is the visibility?
- Are there any blindspots, both when looking into the mirrors and also when looking back to your left and to your right?
Sometimes the salesperson will try to take along a predetermined route. Tell the salesperson that you would like to test drive the car under the conditions that you would normally drive.
When you take a car for a test drive, you want drive under the conditions that you'll normally be driving the car, for example, if you'll be driving a lot on the highway, take the car for a test drive on a highway.
Also, when test driving a car, this is the perfect time to see if there any blind spots that may concern you.
Be sure to remember to park the car in reverse and parallel park if you'll be doing that frequently, so that you can the feel for that also.
By the time that you finish test driving a car, you should have a better feel of whether or not the car is right for you.
The Best Time To Buy A New Car
The time of of the month and year that you purchase your new car can help you save some money. The reason is that dealerships and salespeople are under pressure to sell more during certain times, and that can help you negotiate a better deal.
The absolute best time to buy a new car is the week between Christmas and New Years. Auto dealers are trying to meet end of the year sales goals and salespeople are trying to earn their bonuses. This in combination with the fact that most people aren't shopping for cars can make it a great time to buy a new car. This makes it a great time to buy a new previous model car that wasn't sold earlier.
All dealerships calculate their sales, commissions and bonuses on the last day of the month. If you start negotiating a new car purchase a few days before the end of the month, it's common for them to agree to your deal or at least offer you a better deal as long as the deal gets done by the end of that month.
Signing And Reviewing The Paperwork
The last, and final step, is as important as any other step. You may be amazed at how often dealers "make a mistake" on the final paperwork and it just so happens that every error is always in the dealers favor.
Take the time to review all of the numbers and details of the contract and be sure that everything is as it should be and what you agreed to. If there are any errors, have them correct it right then and there. If they don't, you can and still have the right to walk away from the contract if you have not yet signed it.
If you notice that there was an error made after you have signed the contract and they don't correct it, one of the things that you can do is tell them that you are going to file a complaint with both your State Attorney General and also your state's Better Business Bureau. You can also tell them that you bad reviews and ratings on online dealer reviews. These are usually enough to have them make any corrections necessary if they don't when you first notify them of any errors.