When buying a new car, the path of least resistance might prove costly today and over the years. But if you shop smart, you’ll be able to find the best possible deals. Our friends at Nerd Wallet put together a quick list of tips for your next vehicle purchase.
Weigh new vs. used cars
Choosing a used car gives you access to more-luxurious models with more extras for your money. Be aware, though, that used-car financing often has shorter terms and higher interest than new-car loans. You will also want to determine if a used auto has been seriously damaged in an accident. Use a service such as CarFax or AutoCheck to get clear, accurate vehicle histories. New cars offer a clean slate with the most attractive warranties and usually the best financing terms, however you might pay more than you world for a similar used model.
Know your budget
Determine your budget by adding your own down payment to what you can comfortably finance, making sure that car expenses – including loan payments, maintenance, fuel and insurance – do not exceed 20% of your household income. To estimate car ownership costs, check out automotive sites such as Kelley Blue Book and Edmunds and contact your insurer for coverage prices.
Keep a cool head: Negotiate like a pro
- Research the base invoice price of any new car, or the fair market value of any used car you are considering. Edmunds and NADAguides are great sites to check out.
- Negotiate around actual price rather than estimated monthly payment.
- Dicker over the vehicle’s price separately from any trade-in value.
- Determine if you’re eligible for discounts, incentives or rebates.
- Walk away if you don’t like the deal and check out who will beat prices offered elsewhere.
Shop around for financing
Dealer financing might be the easiest option, but it is not always the wisest. Even when 0% interested is advertised, most buyers can’t get approved for these promotional rates and usually wind up with higher-rate loans. Credit unions often charge less on auto loans than other lenders, on both new and used vehicles. Point West even offers extra services such as financing for electric-car charging stations, mechanical breakdown coverage, guaranteed asset protection and personalized auto-shopping services. Point West also participates in Credit Union Direct Lending, a program that lets members apply for a loan while at participating car dealers.
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