Buying a Car 101

You know what always scared me about buying a new car? The commercials.

You’d see this gorgeous car being driven down a closed course on your TV, showing off all the perks of the vehicle — a V8 engine, 271 horsepower, 490 mile range… whatever the works may be. Suddenly you’re envisioning yourself in this car, along with all the adventures you’ll have in it.

Driving to the beach.

Camping.

A night out on the town.

But five seconds into your daydream, the voice-over starts. A man is talking a mile a minute, and you catch words like “down payment” and “APR”; at the bottom of the screen is fine print that you’d need a a microscope to read.

Your daydream comes crashing down. There’ll be no driving along the beach, no night on the town with your closest friends as far as you’re concerned — especially if it means deciphering the details on the bottom of your TV screen.

But buying a car can’t be that bad, can it? Especially if so many people have them.

I’ve come up with a little cheat sheet to help out all you newbies in the car-buying world.

Today I’ll focus on buying a brand new car.

1. First off, think about your budget. While I don’t want to say settling is the only answer, you definitely don’t want to jump over the moon and buy the first bright red convertible you see. Have a price cap in mind and do not go over it. Self control is extremely necessary when purchasing a brand new car.

2. There are certain questions to ask yourself before purchasing a car:

-Will you need to haul heavy equipment?

-Do you need a family-sized car?

-Will four-wheel drive be necessary according to your location?

-Are you going to travel a lot?

Be sure to mention all these points when talking to your salesperson.

3. Car price. It can be overwhelming, but it doesn’t have to be. There are three prices you’ll deal with: average price, dealer price, and sticker price.

I. The average price is good to know so you don’t end up paying way more than anyone else did. Ask away and keep that number in the back of your mind.

II. A little trickier to get is the dealer price. If you are able to find it, negotiate up from that number rather than working down from sticker-price.

*Keep in mind the dealer will add on dollars for options like air conditioning, CD-player, anti-lock brakes, etc.

4. Do your research. You are buying a car — ideally one that you will have for a loooong time, so you need to know what other people are saying and not just what the salesperson in front of you is telling you. Look at magazines and websites like MotorTrend magazine, ConsumerGuide.com, Automobile magazine, and CarandDriver.com.

FUN FACT:

Dealers profit from you buying cars (Way to go, Captain Obvious — yes I know… but wait for it). Here are the ways they profit from you:

A. The negotiating price for the trade-in.

B. The negotiation price for the new car.

C. Scams in the business office post-negotiations.

5. Fundamentals — AKA bring your drivers license (particularly if you’re going to test drive).

6. Up next is credit history knowledge. I cannot stress this enough: make sure you bring your credit history, in the flesh, with you. All the flashy commercials you see on TV are generally ideal for people with stellar credit history. This doesn’t mean none of the deals will apply to you, but don’t expect to get a cheap-o car just because of something you saw on TV. Your credit score will reflect the car dealership’s faith in you. Simply put, the better your credit score, the easier the car-buying.

7. Another necessary document is your proof of insurance card. You’ll need this especially if you’re applying for a car loan at the dealership.

If you don’t have full insurance on a vehicle before walking onto the lot, make sure you contact your insurance company immediately after the purchase, with the car’s year, make and model, VIN, and number of miles on the car. Once your company has received all the necessary paperwork, and you’ve made the payment, they can send proof of insurance to the dealership and you can take your new car home.

8. Itty-bitty details that’ll save you in huge ways:

-Know the competition. Dealerships don’t like it when someone else sells the same car for a lot cheaper, so if you’re aware of any deals at other dealerships, toss your knowledge out there and see where it gets you price-wise.

-They can’t run a credit history check on you without your permission. In fact, it’s illegal.

-Don’t give the dealer your Social Security Number.

-It’s best to buy a new car the last two weeks of December, or between July and October, so hold out for those dates and you’ll get the best price.

-APR means Annual Percentage Rates. The low rates posted during commercials are, like I mentioned earlier, usually only for people with perfect credit, OR they only last for a certain period of time before they go up.

-Most car buyers these days make an initial down payment (a nice chunk of money), and then finance a balance (AKA they make monthly car payments to pay off the rest).

-Look for the best interest rate… seriously. And read the fine print. Some dealerships will only have a low interest rate for the first year and then it’ll shoot up. Keep an eye on these guys.