What To Do Before Buying That New Car Or Truck
Ahhhh, that new car smell. It's great isn't it? But it comes at a premium. We all know that it's cheaper to buy used instead of new, but if you still don't think you can live without that fragrance of a new car (the real one, not the one you buy from Wal-Mart in the little spray can) - then at least think about following these steps first:
1. Research! If you absolutely have to have a new car, do yourself a favor and spend some time at Edmunds.com and research some of the cars that you are thinking about buying. If you have a specific car in mind already, be sure to research the other cars in its class as well. You might even find another one you like better and is rated higher from consumers, has higher crash test scores, better resale value, higher mpg's, or whatever else floats your boat.
2. Once you have decided on a car, Edmunds has a great feature for pricing - it's called True Market Value. That is basically how much other people are paying for that specific car. This can give you great leverage when negotiating the price on your new vehicle. But you also must keep in mind that it's not a definite price level, but more of a guide for haggling with the salesman about the price.
3. Dare I say the "L" word? Loan! There I said it, whew. Once you have settled on a fair price for the vehicle you are buying, it's time to think about how you're going to pay for it. Since most of us don't pay cash for new cars, most likely you'll need to obtain a loan for your new ride. If so, then you need to pay close attention to the interest rate on the loan. This is not something that can normally be negotiated, but you still need to be aware of what your interest rate will be - even 1 percentage point lower can save you over $700 on an average priced new vehicle, over the life of the loan. My advice on this would be to go after those low APR loan offers that the dealerships sometimes have. You know, the "buy now and receive 2.9% apr for up to 60 months" type of offers. That can save you some big bucks, lets take a closer look. How much money can lower interest save? Ok, lets use an interest rate comparison loan calculator and plug in some numbers, and see what we get. Example 1 - lets say it's for a Chevy Impala: Loan amount: $25,000 Regular interest rate: 6.9% Special low interest rate: 3.9% Loan length: 5 years Total savings with lower rate: $2,073.94 That's right, for this example the lower interest rate would save you more than $2k over the 5 year length of the loan. That money would be much better off sitting in an interest bearing bank account, don't you think? Just for kicks, lets do a higher priced vehicle with the same comparison criteria. Example 2 - Let's say you want a Tahoe instead: Loan amount: $45,000 Regular interest rate: 6.9% Special low interest rate: 3.9% Loan length: 5 years Total savings with lower rate: $3,733.08 With example 2, you would save almost $4k in interest over the life of the loan. That would be a nice down payment on your next vehicle don't you think? There are many different things that factor in to what vehicle you actually end up purchasing - comfort, resale value, safety, style etc. Just make sure you add "research" and "interest rate" to that list, and stay informed!