Besides buying property, buying a new car is one of the most significant purchases you will make. The world of car sales involves many financial factors, and can seem overwhelming to the first time buyer. However, preparing yourself with the right research and information will make the experience much more approachable. The following are five essential things every prospective car buyer should know.
1. Don’t finance from the dealership
Most people will require financing for their first car purchase, and it may be tempting to finance your purchase right from the dealership. After all, it’s convenient, in-house, and they will offer you great-sounding rates – but don’t be fooled. Banks and credit unions like HUECU will usually be able to offer you better financing rates and conditions. Shop around, gather rates and go into the dealership with this information in hand. It will put you in a much stronger bargaining position.
2. Always shop for vehicles at the end of the month
An important financial factor to consider is that many dealerships operate on a monthly quota system. Dealers will receive bonuses for hitting manufacturer and in-house targets, and there is a great deal of internal pressure to meet these targets by the end of month. By buying a new car at the end of the month, there is an increased likelihood that dealers will be desperate to meet their quotas, which puts you in a better position when you start negotiating. Prices and features will begin to shift in your favor if you time your sale correctly.
3. Do your research
It’s essential to do thorough research and know all the important factors before buying a new car. Decide which make and model of car you’re interested in and research other information such as: manufacturer suggested prices, gas mileage, servicing costs, safety rating, standard features and anything else you think might be relevant. Shop around and obtain a number of price quotes. The more information and knowledge you have, the better your negotiating position you’ll be in when you start talking to that salesperson.
4. Beware of extras
Dealers are notorious for attempting to add an endless laundry list of extras when buying a new car. Your once-reasonable price can go right out the window after a few of these options are tacked on to the purchase price. Premium sound-systems, high-performance wheels, rust-proof coating, VIN etching, all-weather floor mats; the list goes on. Some of these extras may sound enticing, but many are completely unnecessary. For example, all modern car paints are already rust resistant. Other accessories can be purchased from an auto supply store for much less money than the dealer would charge. Some practical additions like a roof rack or trailer-hitch make sense if you really will use them. Otherwise, resist the urge to indulge in these extras.
5. Don’t forget about car insurance
A financial factor that many forget when purchasing a new vehicle is how this will impact their insurance rates. Insurance rates can vary greatly between different makes and models of cars. Purchase price, theft rates, accident rates, cost of repairs, safety performance and even the color of your new car could influence insurance premiums. As a general rule, ‘sportier’ or higher performance model cars will fetch the highest insurance rates. That means if the model you’re interested in has a 4-door and a 2-door model, expect higher rates for the 2-door. That slick, sporty import will be fun, but don’t let your premiums get out of control. As always, do your research ahead of time and be aware of how your insurance premiums will be affected by the vehicle you choose.
Need more tips and tricks to help you navigate the process of making your first car purchase? Get in touch with HUECU to speak with a professional who can talk you through the process of getting a car loan.