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Charles Martin
Charles Martin

What To Consider When Buying A New Car

But many Americans make big mistakes buying cars. Take new car purchases with a trade-in. A third of buyers roll over an average of $5,000 in debt from their last car into their new loan. They're paying for a car they don't drive anymore. Ouch! That is not a winning personal finance strategy.

what to consider when buying a new car

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"The single best advice I can give to people is to get preapproved for a car loan from your bank, a credit union or an online lender," says Philip Reed. He's the autos editor at the personal finance site NerdWallet. He also worked undercover at an auto dealership to learn the secrets of the business when he worked for the car-buying site So Reed is going to pull back the curtain on the car-buying game.

So Reed says having that preapproval can be a valuable card to have in your hand in the car-buying game. It can help you negotiate a better rate. "The preapproval will act as a bargaining chip," he says. "If you're preapproved at 4.5%, the dealer says, 'Hey, you know, I can get you 3.5. Would you be interested?' And it's a good idea to take it, but make sure all of the terms, meaning the down payment and the length of the loan, remain the same."

So at the dealership, Reed and Van Alst both say, the first step is to start with the price of the vehicle you are buying. The salesperson at the dealership will often want to know if you're planning to trade in another car and whether you're also looking to get a loan through the dealership. Reed says don't answer those questions! That makes the game too complicated, and you're playing against pros. If you negotiate a really good purchase price on the car, they might jack up the interest rate to make extra money on you that way or lowball you on your trade-in. They can juggle all those factors in their head at once. You don't want to. Keep it simple. One thing at a time.

"Concerning the extended factory warranty, you can always buy it later," says Reed. "So if you're buying a new car, you can buy it in three years from now, just before it goes out of warranty." At that point, if you want the extended warranty, he says, you should call several dealerships and ask for the best price each can offer. That way, he says, you're not rolling the cost into your car loan and paying interest on a service you wouldn't even use for three years because you're still covered by the new car's warranty.

Reed says a colleague at NerdWallet actually bought a minivan recently and "when she got home, she looked at the contract." She had asked for a five-year loan but said the dealership instead stuck her with a seven-year loan. "And they included a factory warranty which she didn't request and she didn't want." Reed says she was able to cancel the entire contract, remove the extended warranty and get a rebate on it.

"But the point of it is," he says, "I mean, here's somebody who is very financially savvy, and yet they were able to do this to her. And it's not an uncommon scenario for people to think that they've got a good deal, but then when they go home and look at the contract, they find out what's been done to them."

"We're actually living in a golden age of used cars," says Reed. "I mean, the reliability of used cars is remarkable these days." Reed says there is an endless river of cars coming off three-year leases that are in very good shape. And even cars that are older than that, he says, are definitely worth considering. "You know, people are buying good used cars at a hundred-thousand miles and driving them for another hundred-thousand miles," says Reed. "So I'm a big fan of buying a used car as a way to save money."

NPR has a personal finance Facebook group called Your Money and Your Life. And we asked group members about car buying. Many said they were shocked by how much money some other people in the group said they were spending on cars. Patricia and Dean Raeker from Minneapolis wrote, "40 years of owning vehicles and our total transportation purchases don't even add up to the cost of one of the financed ones these folks are talking about."

Arguably the most important factor to consider when purchasing a car is the cost of the vehicle. Cars can range widely in price, with some vehicles worth their sticker price while others leave something more to be desired.

Safety rating is also important. Are you driving a vehicle that will crumble the first time you hit a speed bump too fast? Who is going to be driving this vehicle? Maybe you are living out your muscle car dream. If so, your safety concerns may be different from buying your teen their first car.

Your insurance rates typically change when you acquire a new vehicle. Before you choose a model, the nonprofit Insurance Information Institute recommends that you ask your insurance rep how much it will cost to insure.1

Design characteristics are important when choosing a new car. Larger and heavier vehicles typically sustain less damage in auto crashes than small cars. Some small utility vehicles and pickups are prone to rollover accidents.

In addition to considering size, look for cars that have crashworthy" designs. These cars have strong safety cages," the section of the vehicle that protects the occupants. Make sure that the front and rear ends are crush zones" that can absorb the impact of crashes.

If you take time to research prices online before you visit a dealership, you'll have a better idea of what a competitively priced car should cost. Often, the best time to buy is during end-of-the-year sales, when dealers need to make room for newer models, notes the Las Vegas Review-Journal.3

Sources:1 -can-i-save-money-auto-insurance2 -buying/10-steps-to-buying-a-new-car.html3 -secrets-getting-the-best-deal-new-car4 -shopping/buying-a-car-why-you-shouldnt-focus-on-the-monthly-payment-242019

Also, if you opt out of online behavioral advertising, you may still see ads when you log in to your account, for example through Online Banking or MyMerrill. These ads are based on your specific account relationships with us.

Whether you buy from a dealership or online, there are several tips for buying a new car you should keep in mind. You might want to shop around for an auto loan with a low interest rate before you start negotiating with a dealer. Other pointers include waiting for the right time to buy, being flexible about trim levels and optional extras, and being prepared to make an offer as soon as you find a good deal.

Much of the car buying process is common sense. You must know how much car you can afford, get your trade-in appraised (if you have one), and be prepared to walk away from the negotiations if they aren't working for you. But some aspects of the car buying experience are murkier than others, especially when it comes to financing.

There is not a single person in the world who will not get excited when buying a new car. After all, the car will be your companion on ups and downs. More importantly, you have invested a lot in it. That said, buying these cars is itself a really tedious and mind-blowing task. Well, one of the reason is because of the number of choices a buyer has, be it any segment. And secondly, the variants, engine and the transmission options are just super confusing. So, here are 10 things to keep in mind to make things a little bit easy.

We offer an industry-leading car buying service that listens to your exact needs for your next vehicle, use our fleet-buying power to help secure the best price, and can even help you compare your best financing options.

The weather is something you should take into consideration when purchasing a car as well. If you live somewhere with rugged terrain or lots of snow you may want to look into an option with 4-wheel drive such as small SUVs and SUVs. If you are living somewhere that the sun always shines, you can pick from a wide range of vehicle types from compact vehicles to SUVs, but you may also want to take your vehicle color into consideration. A darker color exterior and interior may cause your car to be hot while a lighter color will give you a little relief during those beautiful sunny days. If you live somewhere that you get to experience all four seasons, then you may not need to consider car color, but thinking about the tires is important.

As mentioned before, based on where you are living and working you will have different parking options. If you only have the option of street parking or a small parking area, whether this is at home or work, you may want to consider a compact or full-size vehicle to give yourself more options to park and not have to stress about where you would park each day. If you can park in a garage, driveway, or a designated parking spot, you have the luxury of picking whichever vehicle fits best with the other aspects of your lifestyle.

No matter what, the choice is yours! There are so many variables to consider when purchasing a new car. These are just a few aspects to think about when you start to look for a vehicle in order to find the one that would be the best option for your lifestyle. Luckily, there is no right or wrong answer; it is what fits you best! If you have any questions about specific makes or models, you can contact International AutoSource, and they will be happy to help!

By educating yourself on your personal needs, and your rights and responsibilities as a consumer, you will significantly lower your chances of financial risk. It will also significantly decrease the odds of you falling victim to those wishing to take advantage of you or your family. The following is a basic guide to purchasing a new or used vehicle. To see specific information regarding practices that would be considered a violation of the Consumer Protection Act, please see our Before you Buy site. 041b061a72


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