Courtesy of USAA
If you have good credit and know a few tricks of the trade, you could drive home a great bargain with ease.
Car buying, with the right tools, can minimize the stresses often associated with visiting the dealership.
Assess Your Stability. A new car isn't much fun if it straps you financially, so be honest:
- Is your job even a little bit in jeopardy?
- Do you owe more on your current car than it's worth?
- Will your new car expenses, including payments, insurance and maintenance, exceed 12 percent of your monthly take-home pay?
If you answered yes to any of these questions, you're probably not in a position to buy now.
Know Your Score. A good credit score can help you get a lower loan rate. For the best rates from car dealers, your score should be at least 700. You can find good deals if your score's in the 600-700 range, but you might have to make a larger down payment. Under 600? Put the brakes on your buy. Interest rates will most likely be sky-high, if you can get financing at all.
Get Preapproved. Lock in your loan amount and interest rate with your financial institution before setting foot on a car lot. This lets you assess your credit situation upfront. Dealers like to use financing offers as bargaining chips, but you may not be getting the best rate available to you. But if you already have your loan, you're in the driver's seat.
Consider "Like New." Private parties strapped for cash and customer-hungry dealers are offering great deals on used cars, too. Remember: Cars depreciate most in their first two years, even if they're barely driven, so a 2008 car may be a sweet deal at a bargain-basement price.
Research Market Values. The so-called dealer's invoice, which many sellers insist is what they paid for a car, often includes dealer holdbacks, hidden fees dealers get back from manufacturers after selling a car. At
Edmunds.com, you can research a car's
true market value, or average retail sales price, and also determine a car's costs — maintenance and repairs, fuel, taxes, depreciation, insurance and more — with the site's
True Cost to Own calculator.
Be a Detective. Dealers are motivated to sell cars that have been on the lot 60-90 days. Why? They pay interest on a secured credit line, called floor-plan expense, while a vehicle is in their inventory. You can estimate how long the dealer has had a vehicle by checking the manufacture-date label on the driver-side doorjamb (inside the car).
Time Your Buy. Car dealers have monthly sales quotas to meet, and their actual number of sales is sometimes more crucial than their profit. They may be willing to give you a rock-bottom price if you sign the contract at the end of the month.
Make Dealers Compete. Once you've chosen a make and model, e-mail three or four dealers and ask for firm price offers. E-mailing makes it tough for a salesperson to haggle. You can compare prices and see if the dealers will beat each other's quotes.
posted 7/17/2009