The following post contains advice from Angi Christensen Harben, the Director of Communications for Georgia Credit Union Affiliates. When she was younger, a credit union stepped in and supported Angi’s finances and life. Now, she enjoys supporting credit unions and spreading the financial wisdom she’s gained.
There are a lot of theories and pieces of advice out there about buying a new car. What to look for. When to buy. How to finance. Not necessarily in that order.
About three years ago, I bought my first BRAND NEW car. I was looking for something with great mileage, a good safety rating, enough room to tote some stuff home from the Gigantomart, a payment that wouldn’t break my budget…oh, and I had to look cute in it too.
First, I had to determine what I could afford. There was no sense becoming attached to a car I will never have. Car buying had changed a lot since my last purchase. Like so many other things, it is internet-driven. I checked out some of the free online calculators for ballpark information on the subject. They take prevailing interest rates and some basic credit worthiness questions into account and give you an idea of what you can expect and/or afford to pay for a car. However, in the end, it takes some personal number crunching to truly determine a good fit. What one of these generic calculators considers a reasonable accommodation in my budget might be the difference between steak and peanut butter sandwiches for dinner. I prefer steak. So it was important to keep a realistic eye on what would be a comfortable payment for me. Plus, I have this thing about wanting to own my stuff and not have my stuff own me, so…
After figuring out a general price range, I searched online for crossovers with good gas mileage, checked the safety ratings then the price.
I made a list of my top three choices that, on paper, fit my criteria. I went to my credit union to get pre-approved for financing. Getting approved in advance meant I could negotiate as a cash buyer, which was easier. And working within an established relationship, I was more comfortable talking with
my credit union about my individual situation than turning my personal information over to someone trying to sell me a loan. Call me crazy, but I say the fewer people who have my social security number, the better.
Once I knew what I could afford, I could zero in on the car within that price range that would fit my needs. By the time I walked into the dealership with the car I wanted in mind, I had done the product and pricing research, had my trade-in appraised and was approved for financing the difference. Basically, the sale was theirs to lose.
The salesperson kept talking to me about mileage and safety and the backup camera (a must, by the way). I, of course, wanted to know how I looked behind the wheel. The only way I wasn’t buying was if it didn’t drive like I’d hoped or the dealer’s price didn’t meet my expectations.
I’ve read and heard all kinds of advice on when is the best time to purchase a vehicle. End of the year when dealers are looking to meet their quotas. End of the month or quarter for the same reason. End of the model year when they are trying to clear space for new inventory.
Being the rebel that I am, flying in the face of conventional wisdom, I bought mine when I needed a new car.
Not the end of the month or the quarter or the year. I think it was a Tuesday, so it wasn’t even the end of the week. And it was the inaugural year for this particular model, so there was no incentive to clear out old inventory.
They did offer me zero percent financing – if I was approved, which I pretty much knew I would not get. But if I didn’t qualify for that, they’d gladly give me the opportunity to finance it at a higher rate…most certainly higher than my credit union.
All I needed from the dealership was the car. Which gets great mileage, has a fair amount of room, I feel very safe in, came with a payment I could afford, and, oh yeah, I look pretty cute behind the wheel too.
BUYING YOUR NEXT NEW CAR:
Get approved for financing first. Getting approved in advance means you can often negotiate at the dealership as a cash buyer.
Research price and trade-in value. These are usually ballpark figures, but will give you an idea of what to expect.
Choose the cars you’re interested in test driving. Being flexible on the kind of car you want gives you more leverage to negotiate on price. But keep in mind the non-negotiables. You don’t want buyer’s remorse.
Shop online. Check out dealer websites for inventory and prices.
Negotiate. Let dealers know you’re shopping on price, and that you’re shopping around. They’d rather make less and close a deal than lose a sale.
Review Fees. Besides the cost of the car, there are tax, registration and documentation fees.
Give a final look before signing off. Make sure there are no dents or scratches, that all equipment including floor mats, owner’s manuals, a full tank of gas, etc. is included. Review the contract and make sure the numbers match up with the paperwork you received.
Take a tour of your new car. Have the salesperson give you a hands-on demonstration on how to connect your smartphone to the Bluetooth system, how the audio system and safety features work, etc. Know how everything works so you can get the most out of your new car.