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Searching for the right car to buy can be a stressful endeavor. With high stakes and seemingly endless options, many people have difficulty finding the right vehicle for a fair price. These issues have only gotten worse during COVID-19, as car prices have soared in recent months. Here are some car shopping tips that will help alleviate your stress and make you more confident in your buying decision.
1. Look at Both New and Used
The most straightforward tip for car shopping on this list is to keep both new and used cars on the table. Both options have their advantages and disadvantages.
Used cars are usually – but not always – the cheaper option. You might find a late 2010’s vehicle with all the features you want, but at half the cost of a new one. If you take care of the car, you could sell it later to break even or make a profit.
However, buying used always comes with a degree of risk. You never truly know all the damage, and extra repairs might cost you thousands of dollars. Used prices also tend to spike during economic downturns, so the current state of the economy might take some used cars off the table.
New cars generally cost more than used, but the buying process is more manageable. You don’t need to spend much time evaluating the car’s condition, and price negotiations usually go more smoothly. Dealerships also give you more incentives to buy new cars, such as lower interest rates. New models also have the most up-to-date technology and amenities.
While the new car might drive off the lot in perfect condition, it could significantly deteriorate in the first year of usage. Should that happen, mechanical work on new cars is expensive and could put you in debt.
You might find a happy medium with a certified pre-owned (CPO) vehicle. CPOs are usually only a few years old and have low mileage and a short damage history. They have to pass an inspection to earn a new CPO warranty.
2. Get Preapproved for a Loan
Before you even begin your search, you want to make your car as affordable to own as possible. Consider getting preapproved for a loan from a bank or credit union unaffiliated with the car dealership. The loan will set a limit on your choices and stop you from buying a car you can’t afford. It will also prevent the dealership from hiking up your interest rate and force them to match the rate or give you a better offer.
A pre-approved loan can be a compelling piece of leverage during your negotiations with the dealership, but you first have to get your credit score in order. If the dealership matches or lowers the rate, make sure the down payment and timeline of the loan remain the same.
3. Buy Based on Purchase Price
The full purchase price should always take priority over the monthly payment. A dealer might try to sway you into buying a vehicle with a low monthly rate, but that only means you pay a smaller amount each month for a longer period of time. The monthly payment means nothing if the total purchase price doesn’t fit your budget.
During negotiations, make sure the salesperson clarifies the “full” purchase price. There could be hidden costs, taxes, and a delivery fee. The dealership probably won’t tell you about those expenses until after you complete the purchase, so speak up before it’s too late.
4. Consider Insurance Costs
You must factor car insurance costs into the final price. Once you have a vehicle in your sights, get a quote from your insurance provider before buying. Give the provider the vehicle’s make, model, and past damage, along with your driving record. The provider will use this information to calculate a fair insurance estimate. Whatever number they come up with, add it to the final purchase price.
Some cars naturally have higher insurance premiums than others, such as sports cars and vehicles with long lives and high resale values.
5. Beware of Add-Ons and Extended Warranties
While heated seats, built-in GPS, and a boosted sound system might seem appealing, the costs of such add-ons can cause the final price to grow out of control. If you have a limited budget, you must be prepared to take all add-ons off the table.
Similarly, extended warranties can eat into your pocket and sometimes don’t cover mechanical costs. Opt for the manufacturer’s warranty instead. All new cars and most used cars have valid manufacturer warranties. You don’t want to get trapped into paying for a warranty (plus interest) that you can’t afford.
Control the Conversation
You can concentrate all of the above car shopping tips into one strategy: control the conversation. You should always stay in the driver’s seat, from when you get preapproved for a loan to the moment you officially buy the vehicle. Keep your options open. Don’t let the dealer trap you with low monthly rates, add-ons, or extended warranties. Make your budget and intentions clear from the beginning, and your car shopping experience will go more smoothly.