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How to Buy a Car

The Decision

Buying a new car is not unlike entering a marriage. When you sign that contract, you have legally entered into a long-term commitment and it is a lot easier to get in than out. Like any big decision, it requires a lot of forethought and planning to make sure it is a positive experience for all parties involved and not one to enter into lightly. You will want to pay particular attention to financial planning and making sure you make a choice that will meet your needs and make you happy.

Most consumers today do not have the funds available to pay cash for a vehicle when they need one, but it is possible with advanced planning and a good interest rate on a savings account. The most popular option for obtaining a vehicle include financing through a credit union, bank, dealership, or other financial institutions. It is possible with smart investing practices to make more money by investing your liquid capital than you would save on interest by purchasing a car with cash.

Although it is the most expensive way to obtain a vehicle, leasing is increasingly becoming a more popular option and may be the best choice for consumers who like having new cars frequently or business owners who are able to deduct the cost from their income taxes. While not common knowledge, lease prices are negotiable. There are two types of leases: 1) closed-end leases and 2) open-end leases. Closed-end leasing give you the option to purchase the vehicle afterwards, while open-end leases require that you buy the vehicle.

Remember to factor in all costs associated with a vehicle when calculating your costs. This may help you to determine whether you would be better off keeping your old vehicle. Older vehicles may cost more in maintenance, but do not necessarily cost more overall. To figure out what a car cost to own, remember to factor in the sticker price, cost of financing (including interest), taxes, depreciation, titling, license, registration, and operating expenses, such as fuel, oil, maintenance, repair, and new tires.

It is possible to lower the operating expenses of driving a car by buying a fuel-efficient vehicle, remembering preventative maintenance, doing basic repairs yourself, only running the air conditioning when necessary. It is also important to use the correct fuel type for your vehicle. For example, using low-octane fuel on a high performance vehicle can damage the vehicle. You can save money on gas, by going light on the gas pedal to minimize waste. Hybrid cars store any excess energy produced by pressing the pedal into a second battery for use later, so no energy is lost. Hybrid cars can be a bit more pricy, but are also available used. Even new, they may save you money if you drive a lot.

The Deal

The most important aspect of buying a car is to be prepared and do as much research as possible before entering the car lot. Make sure you know important facts about the car or truck that you want, such as the amount the dealer paid for the vehicle and which options or features should be on the vehicle. Figure out the maximum amount you are willing to pay, and walk away if the dealer will not offer you a fair price. Figure out what your trade-in is worth before entering the dealership. It may be worth the money to have your car detailed before taking it for appraisal. You can find out what a new or used vehicle is worth by running a free Black Book report on this site.

Visiting a dealership when salespersons are under pressure to meet their quotas are best for maximizing your negotiating power. These times include the end of the sales week, after the 25th of the month, and at the end of the year. It is best to arrive at the dealership 1 to 2 hours before closing to prevent the dealer.

Many Americans are not used to negotiating and feel uncomfortable negotiating a deal with a dealership and leave feeling used or cheated. It is only natural to feel this way in a new situation. Make sure that you feel comfortable with the dealer that you are working with, and if they make you uncomfortable or give you a bad gut feeling, it may be best to walk away rather than live with the regret of being bullied into a bad decision. The human subconscious is surprisingly attuned to details and noticing when something is off, so trust your instincts.

To get the best price, do not allow the dealer to check your credit score until after negotiating a price, always negotiate up starting at the factory invoice price, and never discuss what you are willing to pay in terms of a monthly payment or a price range. Also, make sure you read any fine print on the contract and get everything in writing. Shop around until you find what you want for the right price.

Warranties and Other Services

Every vehicle comes with a Basic Warranty, which should cover any owner of the vehicle for all listed services free of charge, including removing and reinstalling any parts and should the dealer fail to fix any defects within several attempts, offer a full replacement or full refund for the vehicle. It should have no limits on the duration of Implied Warranties.

The Implied Warranty is state regulated and protects the buyer from dealerships who might sell you a car that does not run or fails to meet any of their other functional promises. This is available in all 50 states and unless sold “as is” or “with all faults,” it automatically comes with your vehicle purchase.

Check out the extended service contracts and additional services available through your credit union before visiting the dealership. Make sure you compare those prices and the services and repairs offered by the dealership. Most of the time, you will pay more by purchasing additional protection through the dealership and will not get as much out of it. Even “bumper to bumper” warranties have exclusions, so make sure you read the paperwork carefully so you will know what is covered. Some other warranties that might be available to you include Power Train & Major Component Warranties, Corrosion Warranties, Limited Warranties, Auto Emissions Warranties, and Extended Warranties.