There’s no doubt about it; if you buy a car used, you can drive off with a huge deal. That said, there’s a reason consumers are so drawn to the appeal of a new car: the rich smell of leather, immaculate stitching along the interior seams, brilliant hardware that shines without a spec of rust, no miles on the odometer, just you and the open road ahead…
We get it, sometimes it seems like the only option is to buy a set off wheels fresh off the lot—and if you follow the right steps behind car buying, you can end up with a financial sound investment that builds personal wealth.
So how do you set yourself up for the best success, and avoid purchasing an asset that depreciates past its worth? Here are our three best tips.
Shop Backed with Research:
An informed buyer makes a hard sell—so don’t let a salesperson at a dealership walk all over you! You’ll probably feel dizzy from the number of car models spanning the massive lot, slashed price tags across window displays, percentage signs, acronyms, the list of information goes on and on. And that’s not even to mention the distraction techniques dealers have tucked in their back pocket!
Come prepared with a clear head and thorough knowledge of the car market you’re looking to enter. Know which trim caught your eye online to avoid a seller talking you into look at the next best in the lineup. Know in advance if there are any recalls on the vehicle you have in mind and use them to your advantage; the same thing applies to cars that run on diesel fuel following the Dieselgate debacle that came to light in 2018. Compare offers at different dealers in different cities. For example, don’t buy a Volkswagen for sale in Columbus until you compare the promotions taking place at similar dealerships across all of Ohio.
If you come in with all the numbers, including what the competition is offering, you just might be able to close the deal below fair market value.Remember, the salespersons wants your business, they thrive off commission.
Compare Finance Options:
You can purchase inexpensive cars outright in cash, but most of us need to finance the new make and model that we hope to own. If you want to avoid outlandish interest fees, be sure to familiarize yourself with the different car finance plans available before heading to the dealer. Otherwise, you might get strong armed into a deal that’s great for them but not in your best interest.
The two main types of finance plans used to purchase cars are Hire Purchase (HP) and Personal Contact Purchase (PCP):
- HP—Down payment of 10% of the car’s total worth with fixed monthly payments for an agreed period of time
- PCP—Predicted value is deducted from current value and monthly payments are made based on this depreciated figure; final balloon payment must be made at the close of financing in order to claim ownership of the car
Pro tip: Whether you want to lease or buy your new car, it’s smart to get pre-approved for a car loan before heading down to the dealer. They’ll take you more seriously, won’t try as hard to push you outside of your budget, and will save a ton of time getting you behind the front wheel and off the lot!
Go at the Right Time:
Sometimes, we can’t choose when a new car demands itself. Your kid takes the family car to college; the transmission stops shifting; a distracted driver runs a red light. Life can throw us curve balls that necessitate a new vehicle and fast. But if you can take your time, be sure to time the dealership for the best savings.
The best months to a buy a new car are October, November, and December. Dealerships need to hit their quota for sales goals, so the chances of you scoring a sweet deal are pretty high. Holiday specials also boast plenty of savings around seasonal sales around Memorial Day and Labor Day. If you can’t put off your purchase for months, try to at least wait past the weekend; studies show you might be able to get a lower price on a car if you purchased it on a Monday rather than the busier day before.
If you’re smart when buying a new car and follow these best practices, you’ll become a proud car owner without experiencing the guilt or regret that can come with purchasing a vehicle right off the lot!
