No matter how many times you’ve bought or changed cars – shopping for a new one is always an exciting experience. It can also be slightly overwhelming, especially if you are a first-time buyer and are on the market for a brand-new car. However, this shouldn’t be the case if you bear the following in mind
Here are seven tips to keep in mind when shopping for a brand-new car.
- Honesty is the best policy. There is a perception that car salespeople aren’t particularly the most honest and will do whatever they can to rip you off. This may or may not be true. The truth is that they are in the business of selling cars and they will try to sell you anything and everything, just so they can get a better deal from you and earn a better commission for themselves. Yes, the things that they offer you will be tempting, but are they the things that you were looking for? Are they within your budget? Be open about your objectives, buying time frame, finances and the condition of your trade-in (if you have one). The salesperson will respect you and your needs, which helps make the process easier and more efficient for you.
- Buy with the future in mind. Let’s say that you are a newlywed couple buying your first vehicle together. A small, sleek, sporty, two-door might seem like a great choice, but it becomes less so if you have children in the next few years and you must then outfit your vehicle with child car seats. It is sometimes impossible to predict the future, but you can make some educated guesses about how long you’d like to keep your brand-new car, and what might happen in your life during those years. Doing so can help you choose the kind of car that is not only right for you now but will also continue to stay appropriate for your lifestyle for years to come.
- Balance desire with financial reality Don’t let a dream car’s immediate appeal trick you into making an impulsive and unwise financial decision. Some people find themselves with financial difficulties because they’ve purchased or leased a car that was above their financial means. Before you start shopping around, think about some of the features that you would like in your dream car, and you might be able to find something within your budget, that has at least some of them, or something similar.
- The manufacturer’s suggested retail price (MSRP) is only a guideline, not a set number .That sticker which you see on a new car at the lot usually includes the manufacturer’s suggested retail price (MSRP) — but you can negotiate.
- Research service packages before you hit the dealership. Picking out the vehicle is only part of the purchasing process. Once you’ve chosen your ride, you’ll then have to choose what kinds of warranty, maintenance and service packages you want and can afford to invest in.
Do a little digging into offers and options before you hit the dealership, so that you are not surprised and overwhelmed with the options that they’ll present to you, while finalizing the deal. - Residual value or balloon payment vs. normal instalment and leasing There are various payment options when buying a car. You can go for a normal instalment or choose to have a residual value or even choose to lease the car. A Normal instalment allows you to spread the total vehicle price over five years or so.
- A balloon payment loan influences the instalments one pays each month. Instead of having the total vehicle price spread over a full five or so years, you defer a percentage; about 30 percent, to the end of the financial period and you will only be required to pay it then.
Inasmuch as that sounds great, in the long run it becomes an expensive option, having to refinance the car if you don’t have the lump sum. To finance the outstanding residual amount is the next logical step and it ends up being much more expensive in the long run. Balloon loans are in most cases not the ideal way to finance a car and people often end up paying more at the end of the loan term. This only delays the payment and individuals end up paying more interest. Leasing is a long-term rental agreement with a dealer offering the facility. A periodic lease agreement is signed up front. Conditions do apply, so make sure that you understand up front which costs the lease company is liable for. Some lease agreements put a limit on annual mileage. - Your total transportation expenses When you’re shopping for a brand-new car, it’s crucial that you have an idea of not only how much you can spend on the car itself, but also roughly how much you can afford to spend on average, on total vehicle-related costs — including car payments, insurance, fuel, etc. — which should hover somewhere around 15 to 25 percent, or less, of your total income. You may want to go a bit higher than that, but remember that cars depreciate rapidly, unlike other assets like homes, which usually gain value over time.
