5 Things to Look out For When Purchasing a New Car is a post originally published on: Everything Finance - Everything Finance - Its all about Money!
There comes a time when most of us begin to think about getting a new car. No matter what the reason, when the time comes for you to start looking at new cars, there are a lot of things to think about. And, if you aren’t careful, some of these items could really cost you some serious money in the long run. So, it’s always best to do your due diligence when purchasing a new car to make sure you are getting the best overall deal. And, potentially save yourself a lot of cash in the long run!
1. Trade In Value
Not everyone will be trading in a car, obviously. But, for the majority of us who are entertaining the idea of trading our car in, this section is for you.
First things first, though. You should always check to see what your car could be worth on these websites:
- Kelley Blue Book
- CarFax
- CarGuru’s
When you get your blue book value from Kelley Blue Book or CarFax, you can also sign up to get your instant cash offer. If your car qualifies, it will be sent to participating dealers near you. Some, or all of these will contact you to discuss your car and set up a time for you to bring it in. If you choose to do so, they will assess it and tell you what they are willing to pay, which is usually pretty darn close to the value you were given.
We did this with one of our cars last year and the process was exceptionally easy and quick. They also ended up offering us the best trade in value price, well over what CarMax was willing to pay.
But, no matter which site you get your potential value from, it is worth your time to shop around. With my most recent trade in, I shopped 5 different dealers after I got my trade in value, including CarMax. The dealer I ended up going with happened to be the one that I bought my new used car from because he offered me the best price for my car, by far.
And while it was a bit of a pain, it ended up being worth it in the long run to the tune of 28% more than any other dealer offered me. I don’t know about you, but I will happily keep that amount in my pocket!
2. Cash Savings
If you happen to have planned this potential purchase out really well, then you might be paying with cash. Saving up the cash ahead of time, instead of financing, can ultimately save you more money than you think.
Not having to deal with the extra paperwork of financing, or the longer term interest you will be paying are already huge bonuses of paying cash. However, a lot of dealerships will also offer a discount on top of that if you are willing to pay cash.
I know the few times I have paid cash when purchasing a new car instead of financing, they offered me a discount. The discount has varied between dealerships, but it ranged between 2% and 10%. So, not only did I not have to pay the extra money in interest, I also save an extra percentage off the top. While that may not work for everybody in every situation, if you can plan accordingly, this is always the way to go.
Unless, the dealership happens to be offering one of those RARE 0% interest deals for a certain amount of time. If that is the case, take that deal instead and continue to save your money in a high yield savings account to continue making money on your money. Just make sure you pay off the car before the 0% interest rate runs out, otherwise, it will have all been for naught.
3. Financing Terms
If you do happen to be financing your new car purchase, then pay close attention to the fine print. The rates and terms can vary widely depending upon the dealership, or who you decide to get the financing through. The best places to look at financing are:
- Your personal bank
- Dealerships
If you are purchasing through a larger dealership, you can inquire about their rate and term options ahead of time. I would suggest comparing those with the rates and terms at your personal bank. If you have multiple banks, like we do, I would look at all of them. Not all banks are created equally and they each have areas they focus on more.
So, some banks will naturally give better rates and terms because they do a lot of business in this area, whereas others do not. We have found Credit Unions to rank among the best for car loans, both new and used.
Once you decide upon where you will be getting the financing from, choosing the right terms for you is the next step. Overall, if your budget can swing it, you want to take the shortest loan term possible. This will help reduce how much you end up spending overall on the interest for this vehicle.
But, you should do the math ahead of time to see what you can comfortably afford within your current budget. After all, if you can’t easily afford the monthly payment, then you might want to rethink this particular car purchase.
When purchasing a new car, these tips can really save you some money!
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4. New Car Warranty
When it comes to a brand new car purchase, they all have warranties of some sort. Usually, a brand new car will have a manufacturer’s Warranty and in a lot of cases, another one from the dealership. But, this will depend on the dealership.
While this can be true with the larger dealerships, not all smaller, independently owned dealerships won’t have an extra warranty.
So, if you are working with a smaller dealership, I would suggest inquiring as to their warranty program first.
When it comes to purchasing a used car, that can be an entirely different story. Depending upon the model year and mileage, the manufacturer’s warranty may already be gone. But, some dealerships will still offer a warranty of their own for a certain amount of time on a used car too.
Take for example, the 2013 Lexus ES300h (yes, it’s a hybrid!) I just purchased in January. While the manufacturer’s warranty was out of date, the small dealership I was working with offered a 7500 mile/6 month warranty on all vehicles through a 3rd party company. I haven’t found a lot of smaller dealerships willing to do that, so if you run across one, take advantage!
The biggest thing to keep in mind with warranties though, is that most warranties require you have regular maintenance performed on the vehicle. If you don’t follow a specific maintenance schedule, usually outlined by the manufacturer, your warranty can become void. And none of us wants that!
5. Insurance Cost
I learned a long time ago to create a great working relationship with my insurance agent. If you don’t have a personal relationship with your insurance agent yet, add that to your list of things to do. They can really help you save some serious money if you talk to them ahead of time.
When I am looking at different car options, I usually contact my insurance agent to give them the list of my choices. Usually, this will include things such as:
- Year
- Make
- Model
- Mileage
- Amenities
While you may not have all of that narrowed down yet, even the basics can really help. The reason to do this is because insurance rates aren’t the same for all cars. They can swing widely depending upon the aforementioned factors.
Sometimes it might only come down to the year, make or model that can really affect the rates. So, I would suggest narrowing down your top 3-5 choices and then contacting your insurance agent to get the different rates. This might not have a huge affect on your overall thought process when purchasing a new car, but it probably should.
If one car will cost you 25% or more per month than another one, that might be a reason to change your car considerations. I know that it has for me in the past. I ended up getting a completely different car than I was originally looking at and I simply loved it. Plus, it cost me a lot less in insurance. That is what I call a win!
Best Tips for Purchasing a New Car
Overall, there are a lot of ways you can save money in the long run when purchasing a new car. During the due diligence process, these are some of the top things to look for:
- Trade in value (not all dealerships are created equally)
- Cash savings (purchasing in cash can save you a ton of money)
- Financing options (not all banks or dealerships have the same financing terms and rates)
- New car warranty (not all dealerships offer a warranty or have the same terms)
- Insurance cost (not all cars cost the same to insure)
Once you have checked all of these items and are confident you are getting the best deal, then go ahead and make that purchase. After all, purchasing a new car doesn’t have to kill your wallet, if you go into it with all the facts ahead of time.
What are some of the things you look out for when purchasing a new car to help save you the most money on the purchase?
5 Things to Look out For When Purchasing a New Car is a post originally published on: Everything Finance - Everything Finance - Its all about Money!
