Now that you’ve decided whether to lease, buy old or buy new, let’s look at the next steps.
Pick your dream car, and adjust. Americans spend an average of 540 hours in their cars every year; that’s the equivalent of driving more than 3 weeks’ straight. Liking the car you’re in is obviously important. However, it’s also important to be realistic in terms of your budget and needs. You may love the idea of rolling around town in the civilian equivalent of an Abrams tank, but when you factor in lower mileage and the added cost of valet and lot parking since you’ll never be able to find a street space, the numbers just don’t add up. Make a list of specific qualities you like about your dream car (besides “it’s expensive”) and then look for those qualities in a more modestly-priced car.
Do your homework. If you are like most people, buying a car (including used) is one of the most important purchases you’ll make and you need to act like it. Luckily, when it comes to car research, the Internet is your friend. From car-specific sites like Edmunds.com or MSN Auto to general personal finance advice sites like Wise Bread, the World Wide Web is full of resources for the savvy car buyer. Some specifics you will want to investigate include free quotes for the make and model you’re looking for, reputation of reliability, and the invoice price (i.e. what the dealer pays for the car).
Homework also includes talking to friends, co-workers, neighbors…anybody who will share their car raves and complaints with you. Knowledge is power; arm yourself accordingly.
Don’t wait until the last minute. If your current car has lapped its last mile and you absolutely need a car to get to work tomorrow, you’ll find yourself bargaining from an extremely low position. Try to anticipate a car purchase at least a year in advance, and start the research process several months early.
Scout ahead. The first time you go to a dealership, do it with absolutely no intention to buy. Leave your wallet at home—you’re just browsing. Even better: go on a day when the dealership is closed. Wander around the lot and check out sticker prices with impunity. Part of this is psychological: Car salesmen have the home-field advantage. By checking out the lot beforehand, you’ll be more comfortable when you return to buy.
Don’t be afraid to walk away. This is crucial: be able to ditch any deal that is less than ideal. The dealer will almost always prefer to make a little less on a sale today than hope that you’ll come back.
Choose your moment. When it comes to buying a car, not all days are created equal. In general, the best times to buy a car are (in order) the end of the calendar year (especially the day after Thanksgiving and the day after Christmas), the end of the model year (usually around July, depending on the model), and the end of every month. Organize your purchase for one of these times and you stand to get a much better deal.
Avoid the up-sell. Car salesmen know that when you put a big pile of money next to an even bigger pile of money, that first pile seems relatively small. They use this knowledge to get you to pay for features you don’t really want. Don’t be fooled. When a salesman says he can “throw in” the retractable sunroof for only $300… that’s still $300, no matter how little it seems compared to the total price of your car.
Plan financing in advance. If you are paying in cash, congratulations: being able to write a full check immediately means you can get a much better deal (note that all the other tips still apply). But keep these in mind whether you are planning on paying cash or taking a car loan:
–Planning ahead of time includes saving. If you save enough to buy the car flat-out, fantastic. If not, every little bit you manage to save up will go a long way in reducing the total amount spent after interest. The higher your down payment, the less interest you’ll end up paying.
–Start a dedicated savings account where you save every month exclusively toward your future car. Using an automatic savings program (i.e. one that regularly transfers a set amount or percentage of money to your savings account) is a great way to build up your account. Once you’ve bought the car, you can dedicate the same account toward your car payment.
Buying or leasing a car isn’t the easiest purchase you’ll ever make, but by making good choices for your budget and needs, it can be one of the smartest. When you finally do drive off the lot, you can do so confident in the knowledge that you’ve made the best choice for yourself, and that your money’s been well spent.