Cashology by FNBO
Take the Wheel - Staying in Control of Your Auto Purchase
Episode Summary
In spite of all the new ways we can buy cars these days, it’s still easy to pay too much. Getting a good deal comes down to doing your research, comparison shopping, deal making and being willing to walk away. Whatever you do, don’t just drop by a dealer without knowing exactly what you’re going for. Be smart.
Episode Notes
Divide your car buying process up into two parts
Step one -- research
- Figure out the specific car you want to buy
- Play around on auto websites and “build your car”
- Learn what it costs, base model and trim levels and extras
- Use car sites like Edmunds and Kelly Blue Book
- You can learn what others are paying and what’s a good price
- This info can keep you from overpaying
- Search dealers for incentives like cash back or low-interest financing
- Make sure they apply to the car you want
More research
- Locate the car you want to buy online
- Search dealer inventories
- Write down the stock number and vehicle identification number
- Check your credit score, too
- The better your credit score, the better your terms
- Use an auto loan calculator to calculate your monthly payments
- Get pre-approved on your financing before going to the dealer
- And then see if the dealer can beat it
- They often can
- Going to the dealer, bring your preapproved info, driver’s license, proof of insurance and a funds for your down payment
- One last thing – if you want a trade in, know what it’s worth
- Research your trade-in online before going
Step two -- Deal Making
- One good way to haggle is via email
- Dealers will give you a quote via email
- You can get a lot of the haggling out of the way that way
- And without having to look someone in the eye
- And email keeps you from sitting around a sales office all day
- Test drive the car – make sure it’s the one you want
- Ask for the dealer’s best price
- If they won’t name a price, start at least $1,000 below what your research says
- If they want to talk to their manager, fine
- But let them know you’re expected somewhere and have to leave soon
- Keep making counteroffers
- Only raise your price $250 at a time until they meet it
- Ask them about fees and extras – don’t get surprised
- See what they can kick in for free
- Watch out for upsells, extended warranties, service packages and the like
- The better price you negotiated, the harder they’ll try to make it back on an upsell
- Leave with a freshly washed car, a full tank of gas and a payment you can afford
Buying vs. Leasing
- You need to research and haggle whether you’re leasing or buying
- There are benefits of leasing a car
- Lower monthly payments, always having the latest technology, always being under warranty, saving some money on sales tax
- But you don’t own the vehicle, you always have a car payment, there’s a mileage limit, you can’t customize the car, there’s no trade-in value, for most you have to go to the dealership for repairs
- A lease can be complicated and its costs can catch consumers by surprise
- When you buy, you own the car, you can drive it as much as you want, it will have some trade-in value, you can make it your own, when the loan is paid off the payments end
- The main temptation to lease – you can get more car than you can afford to buy, because the monthly payments are lower
- The main attraction of buying is ownership and control and an eventual end to your payments
- Financially, for most people, it makes more sense to buy
Useful info/links
- NerdWallet: https://www.nerdwallet.com/article/loans/auto-loans/the-car-buyers-checklist
- Consumer Reports: https://www.consumerreports.org/buying-a-car/leasing-vs-buying-a-new-car/
- The Balance: https://www.thebalance.com/pros-and-cons-of-leasing-vs-buying-a-car-527145