Save Money Buying a New Automobile
Buying a new car is one of the largest purchases most people make in their lives. Therefore, it is worth taking care and making sure the deal you get is the best possible.
Paying Cash is Best
Cars are depreciating assets. So in general it is best to pay cash if you can, and try hard not to finance too much money at interest on a deprecciating asset. To pay interest on a depreciating asset means that you are discounting the value of your future labor and income.
After you drive a car off the lot it loses thousands of dollars in value, and in most cases the car's value depreciates much faster than you can pay off the loan...especially for the first couple years.
Just because you feel like you could buy a new car does not mean you should. If your old car still runs great and requires little maintenance then you can put yourself in a much stronger position by driving it for another year or two, and saving the money you would have spent on a new auto loan payment to use on a down payment down the road.
If you can find a used car that is in great shape that can also help put you in a stronger financial position.
Financing Your Car Loan
If you need to obtain credit to fund the purchase of the car, you should be aware that the financing offered by the dealer is often not the best deal you can get. Sometimes the dealers get paid a finders fee for recommending a specific loan provider. That fee is, of course, paid for through higher hidden costs in the terms of the loan contract.
If you shop around for loans you may get financing at a much better rate. You should compare the annual percentage rate (APR) as well as the length of the loan and the amount of monthly repayments. Always look at the total amount repayable and compare this to the price of the car to see the cost of the finance.
Sometimes, dealers will offer you a very good financing rate on specific models that qualify. It may not be possible to negotiate on the price of these models and you should check to see if this is cheaper than buying another model that can be negotiated.
Shop Your Loan Contract
Make sure you have a copy of the contract and before you leave the lot, evaluate whether the repayment terms in it are affordable. If the dealer asks you to buy credit insurance, you should add this into the price and see if the car is still attractive. You should also check your existing insurance policies as you may be covered already under another policy.
Understand Your Dealer Contract
If you are considering a service contract you should be clear on what it offers. They have many exemptions and you will already have some cover from the manufacturer’s warranty which is included in the cost of the car. You should certainly ask the following questions:
- What does it offer over and above the warranty?
- What repairs are covered?
- Is routine maintenance recovered?
- Will they pay for parts, labor or both?
- Who performs the work?
- How long does the contract last and what are the cancellation and refund policies?
Wait on the Trade In!
If you are considering a trade in, bring it up only after you have already negotiated the best possible price for the car you want. You should also research the value of your old car so that you know what it is worth. This information will help you see what the dealer is effectively offering you for your old car and if it is a fair price.
Give it a Couple Days Thought
It seems as though everyone is out to get our money. Costs are skyrocketing and more and more products and services are out vying for our attention. Media is focusing its attention on "rear attacks" by directing its advertising on our children, our needs, our fears and emotions. Okay, well, that part's not new, but it's certainly more effective.
Brand recognition is critical for highly competitive retail items and customer service and reputation is the variable that either makes or breaks the deal.
So, why hasn't any of this competition changed the way we buy cars?
Shifting Sales Techniques
Remember back in the 70's? The good old days when buying a new car meant strolling down to the nearest cheesy car lot, getting battered by a slick, fast-talkin' dude all decked out in his disco best.
How is it that, even though the attire and cheese-factor have changed, the slick, fast-talkin' dudes still exist? And seem to be doing better than ever.
Today's car dealerships boast increased customer support and service; touting special employees that are there to serve only you. They preach their employees are very customer-focused and are there to serve your every need.
But are they?
Watch Out For Aggressive Sales Pitches
As consumers, we really have developed a false sense of security when it comes to car dealers and buying our cars. Surely things can't be the way they were just a few decades ago. Companies that don't adhere to the growing customer-is-always-right mantra are certainly companies that don't last long….right?
Well, I'm here to say that the wolf has certainly stepped out of the disco-70's garb….and is now wearing a clean white dress shirt, slacks and tie. Folks, the wolf is alive and well and is waiting for you to come fall victim to his fake loyalty to you.
How did they slip through the cracks? How did they manage to maintain their huge profitability through all of society's demands for increased customer service? How is it that we still have to endure the experiences we do when we go to buy a car?
I'm here to say, the auto dealers have adapted quite well. No longer are they wolves…now they are lions.
Use the Internet
Our generation of car buyer has been given a false sense of security due to the internet. We think that simply by knowing what the internet says the dealer invoice is that we have some sense of power over them. Well, actually, all we know is what they supposedly paid for the vehicle. That doesn't mean they are going to gnash their teeth and say, "Oh darn it, Frank and Betty Smith found out our hidden secret invoice amount…now we HAVE to sell it to them for that!"
Not at all, my friend.
Sure, the dealer is motivated to sell cars. If they don't sell you a car, they don't make any profit. But, if they don't make and profit, they don't sell you a car.
The myths surrounding the dealers still exist; the secrecy is what has kept them so profitable through the turn of the millennium.
Who monitors the car deals to make sure it was all handled fairly and you paid a fair profit for the car? Who watches out to make sure those people with bad credit are really put back on the right track to rebuilding their life with their auto loan?
It's like putting the witch in charge of Hansel and Gretel's health regimen; the "what's in it for her" is much greater than the "what's in it for them."
The only people watching out for you when you are car buying is YOU. It is up to you to be vigilant and protect yourself, your credit, and your money. You can count on the lions stalking you when you call or go in to the lot. You can count on them wanting to still make more money off of you than you make in a month or two at your job. Count on it. And if you aren't careful, it'll come true.
It's going to take more than the internet to protect you from these predators. You will need to look at buying a car in a whole new light. A new breed of car buyers needs to emerge to keep these dealers in check and not let them bully and trick us into handing over all of our hard earned cash and credit rating.
Watch Out for Extended Warranty Programs
Some automotive dealers make most of their profits through selling unneeded secondary warranties. Remember that many of these packages overlap the manufacturer warranty, have terms that void the contract, force required maintenance, and often do not offer good value for money.
Verify Prices on the Internet
Smart buyers now use the Internet to buy new cars. Buying new cars online saves your precious time, money and effort at once. It is much faster and when you buy new cars online from an authorized car dealer, you just reap a horde of benefits. Really it's very easier to buy Cars, Vans, SUV's and Wagons online. But, with a plethora of sites catering to online new car buying, it is imperative that you choose a website that lets you buy new cars from authorized dealers.