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

• Research
• Deal making

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

1. NerdWallet: https://www.nerdwallet.com/article/loans/auto-loans/the-car-buyers-checklist
2. Consumer Reports: https://www.consumerreports.org/buying-a-car/leasing-vs-buying-a-new-car/
3. The Balance: https://www.thebalance.com/pros-and-cons-of-leasing-vs-buying-a-car-527145