Making the best decisions when purchasing a new vehicle can be done with confidence when you have prepared in advance. Here are ideas to help you get ready for that new ride.
What can you afford?
Several factors determine the amount you can afford to pay for a car—mortgage/rent expense, cost of utilities, groceries, medical expenses, credit card payments, etc. Before you go car shopping, take a look at your complete financial picture and set a limit for what you plan to spend. The amount of cash you can put down on the car and also the value of the trade-in will help you lower your monthly payment. Ask yourself what is the maximum amount you can afford to pay every month.
Become an educated buyer
Educated car buyers can save hundreds, if not thousands, of dollars when buying a vehicle. Here are a few ways you can save:
1. Avoid showing enthusiasm. If you act excited, the sellers know they have a unique product you want. The price goes up instantly. Keep that enthusiasm in check until you’ve driven home.
2. Get your offer approved first. If you really want a vehicle, go ahead and make a deposit on it—but be sure your offer has been officially approved first.
3. Do your homework on leasing. Often, leasing is not cheaper than buying. Make sure to carefully review any proposed leasing options before you sign on the dotted line.
4. Know the value of your trade-in. Get the most your old car is worth by checking values at Kelly Blue Book online at kbb.com for new and used car valuations or try Edmunds.com.
Buying new or used
The average new car loses 15% of its value annually for the first five years before depreciation levels off. Used cars require less up front expense, but it’s usually best to apply some of that savings toward warranties that protect you against unforeseen repair expenses.
Consider all costs
In addition to the purchase price, you will need to pay sales tax, registration fees and any inspection fees. These may increase your purchase costs by up to 10%. Also plan ahead for higher insurance premiums on a new vehicle.
Take your time
There are plenty of options—both for the vehicle and the financing—available to you, but being pressured or rushing into a deal before you are ready can lead to making a poor choice. If you’re in need of professional advice on auto buying, call the experts at Mountain America, 1-800-748-4302.