Easy Steps to Getting a Great Deal on Your Next Car
We all dread walking onto that car lot and being approached by a salesman that we just know is going to try to pressure us into buying today and spending more than we want to spend. It doesn't have to be that way. With just a little preparation, you can make sure that you get a great value and protect your investment
Don't fall in love with having a brand new car. The newer the car, the worse it depreciates, with the first year being the very worst. By finding a used car that is still under factory warranty, maybe two or three years old, you will avoid the worst of the depreciation and you can usually buy a relatively inexpensive extended warranty that will cover everything that the factory warranty covers.
Look for a warranty that has a small list of excluded repairs rather than a big list of items that are covered. In the warranty book that originally comes with a car, you will see a warranty that essentially says that everything except certain normal wear and tear items (alternators, tires, batteries, light bulbs, etc) is covered. You want to look for similar wording on your extended warranty. A long list of covered items is always much shorter than the list of things that can actually break. If the warranty company is able to claim that a covered item broke because of the failure of a non-covered item, they will deny the claim.
Be sure any warranty is transferable because that will make a big difference in resale value and desirability when it comes time to sell.
Once you have decided on a make and model, decide how much you are willing to spend on it buy researching the value with NADA at www.nadaguides.com or Kelley Blue Book at www.kbb.com. Try to pay somewhere between trade value and retail value at a dealer. Mileage makes a difference, so be sure to know what effect low or high mileage has on the value.
Have your financing arranged in advance. Credit Unions frequently have very good rates. You can also find some lenders for your area and their published rates by visiting www.bankrate.com. If your lender offers extended warranties, be sure to get the pricing and factor that into your payment.
Don't tell the dealer that you are paying cash. Let them believe they will be doing the financing because they make more money when they arrange your loan. The old idea of getting a better deal with cash simply does not apply any more. The salesman may get excited about your cash, primarily because he's paid to be excited about anything you say, but the person making the decisions only sees the bottom line. If he believes the finance department can recover some of the lost profit on the sale price, he'll be more willing to sell the car for less.
After you have agreed on a price, it will be time to sit with the finance manager and, if he doesn't give you a better interest rate than you found on your own, hand him your bank check or draft. Be sure to get his price on the warranty.
Even if he beats your bank's rate, a higher priced warranty could outweigh the savings in interest. The simple test is to compare payments over an equivalent number of months. The total that comes out of your pocket is really all that matters.
Don't be afraid to walk on a deal. By doing your research, you will know if you are getting a bargain. If a dealer paid too much for a car it's not your problem and you shouldn't be penalized. You can find another car. The value of the car in two years will have nothing to do with the amount you spend on it today so why lose more than you have to?
Kevin Maher is the Agency Liaison at Debt Management Credit Counseling Corp (DMCC), a 501c(3) non-profit charitable organization offering free financial education and budget counseling across the USA. Call us at 866-618-DEBT or by visit http://www.dmcccorp.org. Email Kevin at kevin@dmcconline.org
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