Recently, I have shared some tips on buying a house. My husband and I are actually starting to prepare to purchase a home, we have been looking at ways to save money as well as improve our credit situation as we want to qualify for the best rates. One way that may not be the most obvious 1st thought is to consolidate, refinance or obtain debt at better terms. Better rates, better terms and lower payments can in fact improve your credit scores, lower your overall DTI (Debt to income). I decided to share with you some of the tips on buying a car and what we have learned the hard way. I hope it can help you to avoid some of our mistakes.
With this in mind, we decided to take advantage of recent large Factory rebates deals and advertised low rates to trade in our previous car which didn’t have the best terms. We made some mistakes last time (one of which is covered below) which caused us to be in a bad loan and most all of our hard money was going to pay for interest while the value of our vehicle (while less than 2 years old) was dropping by the day. Our options were to continue to pay on our current car for a few more years and then have a car worth less than 1/3 of what we paid for it. We decided to get out now.
#1. DO YOUR RESEARCH IN ADVANCE (Don’t shop emotionally) :
Check the Internet and local papers to see what kind of offers are being made at your local dealership. Also, ask around and find out which dealerships are actually the deal makers in town. Not all car dealerships are created equal. Some dealerships have a better inventory, may be over stocked or may simply have better rebates and offers to make due to volume of sales or business arrangements with the manufacturer.Taking advantage of special financing terms from the manufacturers bank or rebates being offered to discount the cost of the car or as cash back which can all help your bottom line. Getting cash back or rebates can make the purchase of your new car affordable when it may not be otherwise.It is not good to go shopping and buying because you are excited and fall in love with the shiny new car. Going unprepared will likely end you up in a bad deal that can take years and thousands of dollars to get out of later.
#2. DON’T BE AFRAID TO LET THE DEALERSHIP ARRANGE YOUR FINANCING :
The dealer can often get you financing as good or better than your local credit union or bank can, this actually allows the dealer to make something off the markup, or “reserve,” on the interest rate. If the dealer can earn a profit on that end of the deal, you may be able to negotiate a lower price on the car.With that said, it doesn’t hurt to know what rate your local lender can offer you before heading to the dealership. Since your interest rate is primarily determined by your credit history (score), knowing in advance what your score and credit is in advance is a very good idea.
#3. DON’T NEGOTIATE THE PAYMENT, NEGOTIATE THE PRICE :
Having a pre-determined budget is a very good idea. You should know how much you can afford and are willing to pay and stick to your number (see Emotional rule above). If the dealer knows what your payment target is, they will often steer the deal towards that payment and ultimately can cost you more than you need to pay. Also, they know that it is likely that if they come even remotely close to the number you provided and you have already fallen for the car, they will get you to sign on the bottom line. Know what the Manufactured Suggested retail price (MSRP) is on your vehicle in advance. The dealer should then be ale to apply any specials, rebates or discounts to that price to lower the cost. Then you can use your prior knowledge about your credit to make sure you get the best interest rate and financing terms.
Don’t be afraid to say the big NO. If it does not fit your budget or they give you a high interest rates and you think you deserve much lower one, then don’t accept it! You will be surprised how some financial people can give you better rate than the first one they quote you!
Tadaa, meet our baby girl, Beauty – our Hyundai Sonata 2017! I am by no means an expert, but after our research and my husbands many years in finance, I know that these rules will help you in your search for the best price on your new car and the least amount of stress and dollars out of your pocket.
I hope this helps you. As always,I look forward to hearing your feedback in the comments section. Good Luck!