Top 10 Things You Should Know About Buying or Renting a Car
Buying a car is a pretty serious business, both emotionally and financially. The last thing you want to do is give a buyer the guilt of pulling out of a parking lot or feeling like the dealer has sucked you in. Let us help you with our top 10 car buying tips.
10. Find out if you really need a new car or if you can repair an existing one.
Maybe you don’t even need to replace your car. Maybe you can keep your old one for a few more years. This is not an easy decision, so you will have to calculate the maintenance and repair costs of your current vehicle versus its market value and your budget. This flowchart from Consumer Reports walks you through some considerations when weighing in to repair or replace your vehicle.
9. Time of car purchase
Now is the best time to shop and cars are no exception. Sunday in early August seems like the best place to save money on a new car, but there are other times when you can get big discounts on a car, like Labor Day and the end of the year, when dealers are rushing to meet their sales targets. The same method can work at the end of the day or at the end of the month – at a time when you can better negotiate with the dealer. However, if you are attuned to a particular model, there is no guarantee that it will be in inventory at this time, so weigh how much you can save given the lack of waiting.
8. Forget leasing (usually)
In the long run, leasing is almost never cheaper than buying, but for some people, leasing may be better in certain situations. (Even the folks at Jalopnik disagree: leasing is smarter than buying, but is leasing terrible for car enthusiasts ? If you do decide to rent out, just know how to do it without getting ripped off .)
7. Learn Negotiation Tactics (and Dealer Tricks)
Car dealerships are notorious for trying to cheat customers and squeeze every penny out of you, but if you know what to say and when to leave, you can get a better deal on a new car. The best practices for negotiating with dealers involve, well, not negotiating: just set a target you know the car is worth, and keep track of the days and times that the dealership may be more forced to work with you. Timeline, above). Look for a dealer’s “holding back” clause , an incentive that can help you negotiate a car price close to the actual invoice price, and other fees you can charge such as advertising fees and dealer prep fees. Be aware that some vehicle options and add-ons are not worth a dealer install .
6. Try a no-bid approach.
Better not even contact a car dealership until you’re ready to buy. If you are a Costco member, you can use their car buying service to get pre-negotiated rates with select dealers and avoid bidding altogether. (Keep in mind, though, that no-bargaining dealerships do not always mean bargain. ) I love this hassle-free approach mentioned in Edmunds : Call (or email) dealers asking for their best price saying that on this day you will buy a car from the dealer who will have the best deal.
5. Know how to test drive a car
You can drive, but do you know how to test drive a car? Look for small parts (comfortable seating position, other things that might feel wrong), drive as you would every day, and follow these other tips to get the most out of your test drive.
4. Get your own funding
It helps if you can buy with cash (some say we should never fund a new car ), but we’re not all millionaires. If you really need funding, get your loan before you go to the store to pick up your car so you have more payment flexibility and better rates. Plus, you can avoid the hidden fees associated with dealer loans .
3. Set a reasonable budget.
When you buy a car, you are not really “investing” in it, you are buying a product that depreciates rapidly over time and that you are likely to replace in a few years (even buying a classic car is almost never a good investment ). When purchasing such a commitment, make sure your car budget aligns with your other financial priorities and goals. Use the 20/4/10 rule – 20% discount , funding for no more than four years and monthly vehicle costs less than 10% of your gross income – as a guide to avoid buying too many cars or borrowing too much … for one. If you’re not a car fanatic, 10 to 15 percent of your annual income may be wise to spend on a car, but most people may be better off spending 20 to 25 percent of their annual income .
2. Buy a used car without cheating.
Buying a car – new or used – carries risks. If you decide to buy a used car (after considering these questions ), follow the next ten steps listed on Jalopnik to safely buy yourself a new old car. Also, Craigslist is a popular resource for buying a used car, but you have to be careful: assume the seller of the car is a scammer, inspect the car and follow these other tips to make sure you are not being scammed. … Another (amazing) a source of used cars by: Agency for car hire (car rental can be a good buy ). If you buy a used luxury car , you are likely to get it at a better price than economy cars.
1. Do your research and be patient
Finally, the most important thing is to do your homework. One study found that car buyers who did two things saved an average of $ 230 on their cars: they found out how much a dealer pays for a car and visited two car dealerships. If you can do more research, you will save an average of $ 800 per purchase . Popular car comparison sites can help you do the research you need. Also check your emotions at the door , as this is primarily a financial transaction. As with any major purchase, take your time to get the right vehicle at a reasonable price.
Bonus: Check out Jalopnik’s 10 tips to follow when buying a new car .
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