Before you step foot into a car dealership, there are certain steps you should take, especially in today’s environment. With low inventory, higher prices, and lack of staff, the ‘old way’ to buy a car doesn’t exist anymore.
Here are the top tips you need before you buy a car.
Know What you Want
Don’t blindly walk into a car dealership. Instead, walk in knowing exactly what you want down to the color of the interior, the features, and style. Don’t leave any decisions to be made on the dealership floor.
Do your research at home and know what you must have and what you can live without. This way you won’t get bullied into buying a car with features you really don’t need but felt pressured to buy when you were under the spotlight.
Think about your Future
Think about how long you keep cars and then think about what your future might look like in that time. For example, if you’re a married couple right now, are you planning to expand your family in the next couple of years?
This could make a big difference in the car you buy. A cute sports car may be great now, but if you have a baby next year, you’ll regret your decision quickly. The same is true if you have kids now, but they’ll soon be driving themselves and you won’t be the carpool mom anymore. You might want to focus on a smaller car that will carry you through those years.
Check your Credit Score
An informed buyer is the best buyer. If you know your credit score you won’t be at the mercy of the dealership and the information they provide.
If you don’t know your credit score and you go to the dealership to get financing, they probably won’t tell you if you have great credit. They’ll make it sound like they’re giving you the deal of the century based on your credit. What if you have great credit, though? You may have more options than you realize for financing and risk getting taken advantage of by the dealer.
Pull your free credit reports here and if you want access to the score itself, check with your credit card companies and banks to see who offers free credit score access.
If your credit score isn’t as high as you’d like, you can take steps to fix it. Bring all payments current, pay down any excessive credit card debt, and don’t apply for new credit before you apply for a car loan.
Determine your Budget
Before you step foot in a dealership, know your budget. How much can you comfortably afford in a car payment?
This is a number you want to stick to no matter how they spin it. They may try to tell you ‘it’s only a few more dollars a month,’ but that could end up to thousands of dollars extra at the end of the term.
Know what you want to pay and don’t budge. If the price they offer doesn’t result in a payment that fits in your budget, go elsewhere. Don’t let them bully you into thinking that because of the low inventories, you won’t find a car anywhere else. You will, it just might take a little more time.
Unless you’re desperate for a car, there is always time to wait and find the one that makes the most financial sense.
Get Pre-Approved
You don’t have to get financing at the dealership. Most people fall for it because it’s convenient or they don’t know any better.
Rather than succumbing to the dealer’s tactics, do your own research before you go there. Find out which banks might pre-approve you for a loan. Your own bank might even be able to, which then makes you a cash buyer.
If you don’t get financing at the dealership, you walk into the dealership with the cash ready to buy the car. You might have more room for negotiations, and you won’t end up paying more for their financing.
Research Manufacturer Incentives
Sometimes manufacturers offer incentive financing for people with great credit. The dealership may not come out and tell you about it, though, so know what’s available to you before you buy.
If there is incentive pricing, find out the details and ask about them before you even talk about pricing. Let the dealer know you are aware of the incentive pricing, and you want to see if you qualify for it. Know as many details about it as you can before you even step foot in the door.
Talk about the Car’s Total Price
When you talk to a salesperson about the car’s price, he will likely talk in terms of monthly payments. Instead of telling you that a certain feature costs $2,000, he’ll say, it’s only $13 a month!
This would make you think ‘oh that’s not a big deal’ and take it, when in reality it adds $2,000 to your purchase price.
Don’t let them talk in monthly payment lingo. Instead, ask what’s the out the door price? In other words, what is the total cost of the car and all other fees that go along with it? This helps you make a better decision because you’ll know the car’s total cost.
Negotiate from Home
This might sound crazy, but you’re much better off negotiating from home versus at the dealership.
If you walk in without already agreeing on a price, you’re behind everyone else. Every dealership has an internet sales department. Their job is to negotiate with buyers over the phone. There’s a lot less pressure and sometimes you can even handle the process via email.
If a dealership says they will only talk in person, chances are they are taking advantage of their customers and you should look elsewhere.
When you do negotiate, make sure you mention that you’re shopping around and getting quotes from other dealers too. This usually pushes them to give you the best price off the bat rather than trying to play games with you.
Know your Car’s Resale Value
If you’re trading in a car, know the resale value. Remember, dealerships are in the business to make money, so they are going to try to shortchange you on the trade-in.
Do your research using Edmunds or Kelley Blue Book so you know the true value of your car. While they likely won’t pay the full value, you at least have a negotiating point and know where you want to get to for your pricing.
If they won’t come close to the value the car is worth, consider selling it privately or to another dealership that may give you closer to the car’s value.
Get the Out the Door Price in Writing
If you get the dealer to agree to an out the door price, get it in writing. Without proof, before you know it they’ll add their markup for administrative costs, warranties you didn’t ask for, or ‘market adjustments.’
Dealerships are in the business to markup the actual cost of the car. If you aren’t aware of that and negotiate them down as much as possible, you could pay much more for the car than necessary.
Never walk into a dealership without an out the door pricing agreement. Bring it with you and hold them to it or walk out.
Don’t Forget about Insurance
Car buyers get so focused on the cost of the car and financing that they forget about insurance. First, it’s required before you can drive off the dealership’s lot. But, it also adds to your monthly costs.
Give your insurance agent a quick call before you shop for cars. Ask for estimates on insurance costs for the different cars you’re considering. You might also want to shop around with different agencies to see what they offer.
If the insurance is too high, you might want to consider other cars. While it’s not a cost of financing the car, you must carry car insurance for the entire time you own the car, so it’s important.
Key Takeaway
Don’t go into a car dealership without any information. Be an informed buyer. Know how much a car should cost, what financing options you have, and what features you want in the car so you don’t get sidelined and find yourself paying more for a car than you intended.
