For most first-time buyers, car dealerships are like alien worlds where everyone speaks a different language and has a strange and foreign culture. It is true that buying your first car can be intimidating; you have little idea of what to expect or if you are getting the best deal out of your dealer. Even experienced buyers can fall prey to “buying anxiety”. Faced with an impressive array of shiny new cars and assaulted by a pushy salesperson, the average buyer will feel pressed into making a hasty decision. This guide will show you how to buck that trend, get the most value for your money and most importantly, avoid the sneaky practices of unscrupulous dealers.
The Test Drive: Choosing the Right Car
When purchasing your car from a dealer, you will need to know the standard procedure for choosing and paying for your car. First off, you will be approached by a salesperson; this will be your link to the owner of the dealership. If you have done your research, you should already have a few cars that you want to try out. Simply tell them to the salesperson and he/she will arrange for a test drive. If you have not done your research, you might want to reconsider going to your dealer. As the saying goes, “knowledge is power”. The more power you have, the less likely you will be to get scammed.
In your test drives, you should be able to answer all your unanswered questions about the car. For example, you should be looking for features that were not covered in the manufacturer’s description and you should be looking out for any defects that have been picked up by other buyers. Be sure to test every car on your shortlist, do not worry about wasting the salesperson’s time and just make sure you are taking home the best car that you can afford.
Working Out a Payment Scheme for Your New Car
After you have settled on your new car, you will have to deal with financing. This is undoubtedly the most difficult and confusing part about buying a car. You will be assisted by the salesperson and a financial specialist to help determine what price you will pay for the car and the terms of your car loan. When negotiating on your car’s price, do not expect drastic reductions in price. Be reasonable with your negotiation and realize that every little bit helps. In most cases, a price reduction of 2-5% is considered fair.
As you negotiate your price, the financial specialist will be running a credit analysis on you to assess your payment options. You will be presented with a number of options including short-term and long-term payments. The basic difference between these is simply interest and repayment time. If you do not fully understand what each plan entails, do not be afraid to call up an external bank or financial planner to discuss your financing. Never feel intimidated into signing the contract, take your time and make sure you understand every aspect of your loan.
At the risk of sounding cliché, I recommend that you take the time to read the fine print. Your dealer will not be able to pull any tricks without having to declare it in the contract. If there is any line that you are uncomfortable with, do not hesitate to ask your dealer for a clarification.
All car loans will require a down payment, regardless of their terms. Always remember to bring at least $1,000 to $1,500 as down payment. Never underestimate the cost-saving ability of a good down payment, always try to pay as much upfront as you can afford.
Some dealers will allow you to trade in your old car to help pay for your new one. In most cases, you will probably get a better price selling it to a second-hand dealer instead. Dealers will often undercut the trade-in price to make a profit from reselling the cars themselves. Before deciding to trade-in your old car, be sure to call up another dealer to find out the actual worth of your car.
The Homestretch: Paperwork and Other Obligations
Finally, you will be asked to sign all the necessary paperwork such as your financing contract and insurance. You will also be given several options to accessorize your car and extend your warranty. Do not be pressured into buying these. As good as the upgrades sound, chances are, there is a third party specialist out there able to offer you a much better price.
All cars in the United States are also required to be insured before they can be driven. You will need to get insurance for your car before you can drive it off the lot. Most dealers will be able to offer you an insurance plan right away but you can also choose to work with your preferred insurer.
Always remember that as the customer, you are entitled to enjoy yourself when buying a new car. If the experience ever becomes stressful or otherwise unpleasant, do not hesitate to leave if necessary. Choose your car carefully and try to look out for underhanded practices. Most dealers will include terms and conditions designed to help them maximize their profit. Be aware of them and make sure that they are reasonable.
In the end, remember to be happy with your purchase. After all, you are going to be the proud owner of a brand new car! I wish you all the best in your purchase and remember the power motto: Have Fun!