Take care of these prep steps before you hit the dealership to get your priorities in order.
Buying a vehicle can be an exciting experience! It’s yours and it can give you a sense of absolute freedom. Before you get too carried away comparing horsepower, technology, or safety features, consider the financial impact of your decision.
It’s good to get your facts and your priorities straight before you start shopping for any vehicle to fuel the best decision for your finances, lifestyle, and personal needs. Here are some essential moves to make before your first test drive.
Do Your Research
Today’s car shoppers have so many ways to locate, purchase, finance and insure a vehicle. That said, the first tip to getting a good deal on your next vehicle is to research the price, features, reliability, and total cost of ownership for the models you are considering. Focusing on a few select vehicle models will make comparison shopping and price negotiations much easier.
Consult Your Budget
Even if you think you can afford to spend a large percentage of your pay on a vehicle, it’s probably not a good idea because a car is a depreciating asset that will lose value over time. Plus, even if you can swing a certain payment now, you might experience shifts in income before your loan is paid off.
Your transportation budget should include the monthly payment, fuel, insurance, and maintenance. While keeping these costs below the suggested range might not always be possible, when it comes to vehicles, it’s usually a better financial move to try to spend less, not more. It’s important to allow money for other things in life, and not just your vehicle. You can use the Spending Plan worksheet to crunch the numbers.
What’s Your Transportation Budget?
This spending plan worksheet will help you identify how much of your income you can afford to spend in each category – including transportation!
Get Preapproved — Before You Shop
There is power in knowing the interest rate and loan amount you can borrow from your bank or credit union before you go shopping. The preapproval process will also alert you to potential down payment requirements or the need for a co-signer. You can use this information as leverage to negotiate better financing terms with a dealership.
A great way to start the preapproval process is by reviewing a free copy of your annual credit report. That way, you can correct any errors that could negatively affect you. You can obtain a free copy of your annual credit report.
It’s also a good idea to check your credit score so that you have a solid idea of what to expect when it’s time to finance your purchase.
Plan Your Trade-in
If getting a new vehicle means getting rid of an old one, it’s important to get every penny you can out of your trade-in. Don’t get so excited about the new one that you lose sight of the value of the old one. Clean, condition, and make your vehicle as “sales ready” as possible! Translation? Fix the easy stuff that can improve the value of your vehicle.
Once your vehicle is cleaned up, consider your options for passing it along.
- Sell your car privately
- Trade in your car at a local car dealership
- Accept an instant cash offer from a reputable online dealer
Posting ads online with good photos and seeking a trade-in quote though local dealerships are terrific strategies.
You can also get an instant cash-buy offer through a reputable online dealer. Several nationwide companies will provide you with a cash offer if you complete a short questionnaire about the make, model, mileage, and condition of your vehicle. The offer might surprise you. Even if it isn’t the amount you’re hoping for, the quote can give you instant leverage with potential private buyers and other dealerships.
Now The Fun Part…Find Your Vehicle!
Searching local dealerships might be easier, but looking outside your geographic area for more options may help you save money. You can also shop for cars using online search tools that allow you to specify the distance you’re willing to travel to make a deal.
Get on your neighborhood or installation social media page to search as well. You never know if your neighbor down the road just received PCS orders and is thinking of selling their car. Getting a new car doesn’t have to mean getting a NEW car. In fact, “new to you” can often be a better financial approach.