Five Steps to Buying the Right Car
By offering complete information on models, features, incentives and pricing, the web has become the essential resource for today's car shoppers.
Armed with knowledge, you can walk into a dealership with confidence and buy the car that's right for you.
1. Assess Your Needs and Wants
Answering these basic questions can guide you to finding the right vehicle:
§ How many passengers will you need room for and what are their ages?
§ Do you need cargo space or towing capacity?
§ Do you drive locally or do a lot of long-distance travel?
§ Do you use child safety seats? How many? Which type?
§ Do any passengers need help getting in and out of the vehicle?
Next, which features are important to you? Make a three-column list of your preferences in order of importance. Your list can be as long as you want it to be, but it might look something like this:
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Performance
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Safety
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Looks/Convenience/Comfort
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Engine size
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Stability control
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Exterior color
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2-wheel drive, 4-wheel drive or all-wheel drive
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Anti-lock brakes (ABS)
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Interior: Cloth vs. leather, heated seats, etc.
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Fuel efficiency
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Rear-view camera
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Navigation and entertainment systems
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2. Set a Budget
Set a target price and run it through our car loan calculator to see the monthly payment. Before the economy took a plunge, personal finance experts suggested that a total household car budget — whether you're paying for one car or three — should be about 20% of net income. Today, you may feel more comfortable at a more modest figure.
3. Get Financing
A pre-approved loan puts you in control. Dealers know you can take your loan anywhere and may offer a better deal. Making a significant cash down payment — at least 15% — will lower your monthly payment and prevent you from getting "upside down" — owing more than the car is worth.
The car-buying benefits provide a deduction for the state and local taxes, as well as excise taxes on any new vehicle — but not used — up to a purchase price of $49,500. Eligible purchases must be made in 2009, but only on or after Feb. 17, 2009, the day the bill was signed. Vehicles purchased before the law took effect are not eligible. Learn more.
Total Loss Protection
If you are upside down on your loan and involved in a major accident, standard insurance may not be enough to pay off your loan. Total Loss Protection gap insurance can give you peace of mind and make sure your loan is fully paid off.
4. Understand the Dealer's Price
Here's how it works: The invoice price is the amount the dealer paid to the manufacturer for the vehicle. The manufacturer suggested retail price (MSRP) is typically $1,500 to $3,000 higher than invoice and is usually the same as the sticker price. "People make the mistake of negotiating from the sticker," says Phillip Reed, senior consumer advice editor at Edmunds. Instead, Reed suggests making your first offer from the invoice price.
5. Negotiate a Deal
Let's say you found a 2009 Chrysler Town & Country LX on a dealer's website. MSRP is $27,500, and the dealer's special is "$200 under invoice, plus incentives." Call and ask for the invoice amount and specifics on incentives so you know exactly what the offer is.
Compare the offer on other dealer websites, but make sure you're comparing apples to apples. You want to see if the offers are similar, but you are also checking on the availability of that vehicle. The more there are on dealer lots, the better your chances of getting exactly the features you want and the best deal. "Don't take the first number, thinking there isn't anything better," says Reed. "Your best price is always revealed by shopping around."
Salespeople are trained to get customers on the lot, where they quickly gain the advantage. Reed says keeping the relationship to phone and e-mail helps you determine whether there's a personality match and it keeps the ball in your court until you are ready to finalize the sale.
Most people say they're not good at negotiating, but Reed says negotiating is more knowledge than skill. "Gather as much pricing information from as many sources as you can before you start talking money, otherwise it's all bluff and guesswork."
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posted 1/26/2010