Tuesday, January 4, 2011

7 tips that can help you buy a new or used car.

Welcome readers, its the New Year 2011 and for so many consumers all over the world, especially here in the United States, the beginning of December thru the end of January signals the most popular time of the year to buy a new or used vehicle.

I really don't know why consumers choose this time of the year to shop for a vehicle, maybe they want to start out the new year with a new or used vehicle or a tax deduction perhaps, but in any case right now is the busiest time of the year to buy a vehicle. So because of that and also considering a family member of mine is doing the very same right now as well, I thought that this would be a good topic of discussion as I share some tips that I have learned over the years, read and am currently learning now that could help consumers along this journey.
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There are several ways of going about this, but typically most consumers every 2 to 6 years are interested in buying another car or trade-in what they have for something newer. So let's start at the beginning.

1. Question: How much can you afford to spend on your next vehicle? How much money can you afford to spend on your next vehicle namely total price and if your financing it, what monthly payment are comfortable paying. There is nothing worse then going though this entire buying process, buying your next vehicle and a few months later finding out you can’t afford to make your monthly payments because of any number of reasons. Your budget should tell you. Once you have that magic number figured out, now you can start the buying process.

By the way, that budget amount should include gas, tools, insurance, cost to drive the car per mile, repairs, maintenance and more.

2. Get a pre-approved car loan from a trusted bank. The goal here is to have a car loan though a trusted bank to finance your next vehicle. You don’t have to do this step, but I highly recommend doing it, it gives you options. A perfect way of doing this is filling out a pre-approval application either online or in person at a trusted bank and seeing if you’re approved for a car loan and how much your approved for. If you get approved they might send you want is called a “blank check” with conditions (dealerships that you can use it at and more) with the limit on it. Remember the limit on the check is what you can pay up to for the car using that check.

But that limited doesn’t have to be your max price, nor do have to spend the entire amount. You spend what you can afford to spend.

Once you have the “blank check”, you have an option. When you go to the dealership, you already have financing to buy your next vehicle if you choose to use that check. Now of course when you go to a dealership, that dealership Is going to try and get you to use one of their banks they work with to finance your next vehicle though and that’s already.

But instead of just having that option for financing your next vehicle, you also have that blank check and in some cases you can tell the salesmen that you have a blank check with an approved interest rate (not how much its approved for because they will try and convince you to go up to that limit) and then tell them “can you do better than this loan?”

I’m talking terms, interest rate and so on. If yes, then you have a choice, if not, you use the pre-approval car loan.

But make sure you understand the terms, what are your monthly payments going to be, what is the locked in interest rate (that can move up and down) and of course duration. Is it a 12, 24, 36, 48, 60 or 72 month car loan? 72 months is 6 years, do you really want to pay for this car for the next 6 years just to make your payments look good or get a more expensive car? Good thinking here can save you both time and money.

3. Have existing car insurance and review it. There is nothing worse than walking into a dealership, buying a car and not being able to drive it home because you have no car insurance. Typically most people already have car insurance and they are simply trading in there used car or lease vehicle for another one. But I have seen someone buy a used car without insurance in the past and that can be a nightmare.

Also know that the make, model, engine size, whether the car is 2 wheel drive or 4 wheel drive is, because it does make a difference on your car insurance and you can find yourself paying more or less depending upon the vehicle you buy. Example, if you’re going from a compact front wheel drive car to a rear wheel drive V8 (example, a Chevrolet Camaro), expect to pay more. Even a 4x4 vehicle makes a difference.

And while we are on the subject, see if there are ways to reduce your premium. You could be surprised just how much you could save.

4. Research the vehicle or vehicles online that you’re interested in. Typically most car buyers already have general idea on what type of vehicle they want, whether it’s a compact, midsize car or SUV or truck. A perfect example of what someone could be searching for is a 4 or 6 cyl

Once you have a few vehicles on your list, now try several free or paid car sites and find out what other buyers of those vehicles think of that particular vehicle. You’re looking for feedback on what other consumers who bought that car have to say. Example, you’re interested in Ford Escape, look up what several owners have to say about the vehicle. Try Autotrader, vehix.com, cars.com and etc.

Something along the lines of: Is it roomy, powerful, durably, reliable, fuel economy, handling, engine noise and etc.? Consumers will tell you if they like the vehicle or not especially here in the United States, we love to comment.

5. “Shop around” - Research what dealerships have the car and what is the price. Once you have picked you vehicle or vehicles that you’re interested in test driving to make your final choice. The best thing to do is to go online to sites like Autotrader, vehix.com, cars.com as well as actually dealerships websites in your area and find that vehicle within a 25 or 50 miles of your home.

Note: buying out of state can be done, but requires extra work on your part including registering it and pay sale tax (for United States consumers). Research this one because it’s different in each state or country.

Typically you want to have a few dealerships in your area and see what they charge. Price will jump around from dealership to dealership. Don’t be surprised if you see a several thousand dollar difference. You’re looking for the make, model, trim, mileage (if used), color (be a little open here especially on a used vehicle) and more on the vehicle.

A good example would be: a 2009 Ford Escape, 4x4, V6, Black, Black interior, 28,000 miles, moor roof, CD, MP3, and more for (price). Typically a good rule of thumb is 15,000 miles or less per year of vehicle for used cars. A 2009 with 30,000 miles is a lot depending upon when it was actually built. If the vehicle is used, get a car fax. Most dealerships if you ask will give you one for free.

6. “Warning” Never sign anything until your actually buying the new or used car, namely the contract.

If you only take on thing away from this article, take this advice, never sign anything until your ready to buy the car and its the contract.

Before you walk into a dealership lot, you need to be made aware of one major issue, when you go to a dealership and for whatever reason you’re talking to a salesmen and he/she says “can I get you to sign this letter or something” (that you will come back and buy a vehicle), save your breathe and don’t do it, because that is a contract and if you don’t buy a vehicle from them, they can sue you in court and win a judgement of upwards of $3,000. This is in my opinion a scam and terrible, they just want to make sure they get the deal.

7. “Nailing down the final (out the door price) of the vehicle you want.

Finally when you get to the dealership, once you have picked out the vehicle, test drove it, you have to now locking in price. The vehicle will cost you one price, but then you have to add the extras to that price such as extended warranty (if you want one), security system (if not already on the vehicle) and anything else, plus tax, title, registration fees to get the final (out the door price of the vehicle).

Here in the United States, you can expect to pay upwards of $1500 on a $20,000 vehicle for tax, title, and registration fees depending upon what state you live in.

I hope that these 7 general tips on buying a new or used vehicle helps you in buying your next vehicle. And I hope the experience is a good one. Good luck.