| Resources > The Bottom Line > |
|
2/15/2008
The Bottom Line
By Susan L. Smith,
Director of Training & Financial Education
Buying a new vehicle?
Have you purchased or traded a car lately? Do you think you got a good deal? It's too bad the cost of the car depended on how well you negotiated. But, that's often the way it is. So, the next time you are in the market for a new (newer) vehicle, here are a few guidelines:
First of all, research the model on the Internet (if possible) and find the closest figure to invoice. Of course, there are hidden incentives and such, but do the best you can. At least have a ballpark figure for the vehicle you are interested in. Next, decide how much you can afford to pay monthly. What percentage of your net income will the payment, insurance and fuel represent? What percentage can you afford to pay?
Pick several car dealerships to visit. Before you allow the dealership to pull your credit report, make sure you want to do business with them. Don't give anyone your social security number until you are ready to deal; each inquiry is reported on your credit report. Dealerships only need a valid driver's license to test drive a vehicle of interest.
When you are shopping consider the following:
What is the gas mileage?
Is it a sports car? Will your insurance increase?
How much do the tires cost?
Don't ask for a specific color.
Check out year-end models.
Has the car previously been sold or "spot delivered"?
What is the mileage on the vehicle? (No more than 25 miles for new vehicle).
Has the vehicle ever been damaged? (Flood, hail, damaged during transport)
Be very cautious with added warranties and insurance policies.
What is the dealership markup on warranties and insurance policies?
Buy the car you want and can afford, not the model the salesman wants to sell.
Don't let the salesman know you "love" the vehicle.
Don't be afraid to walk away if the deal is not working for you.
Spot delivery riders are very sneaky. You are agreeing to give the car back or accept higher financing if the plan they are offering falls through after you've had the vehicle for several days. Do not accept that plan! (Research "spot delivery riders").
If the vehicle of choice was built before the flooding in the Southwest last year, it would be a good idea to purchase the history. If the vehicle is used, it's highly recommended that you review the history. You can also research a particular model and year to see if there are any manufacturing problems.
Now you've reached an agreement on the price and are sitting with the finance manager. He or she is probably the best salesperson in the dealership whose job is to sell you extended warranties, gap insurance, and tire replacement coverage. If you can think of it, they have it. Research what you need and be ready to defend your position. I'm not saying don't buy any warranties. Some of them are very helpful and should be considered; just make sure you need it. Also consider pre-approved financing from a bank or credit union.
Being upside-down on your current vehicle is definitely a problem. The only way out is to pay more. Keep the vehicle long enough to pay down the negative equity or have a large down payment on the new purchase. Selecting a model with a rebate will help on the down payment. 40% of car shoppers have negative equity.
When all the dust settles and you are happily driving your new car, don't forget the quarterly maintenance. Change the oil and check the tire pressure.
Drive carefully!!
Susan L. Smith, Director of Training & Financial Education of Consumer Credit Counseling Service of Greater Dallas. You may email her at TheBottomLine@cccs.net.
|
