Buying a car can be both an exciting and stressful experience. On one hand, buying a car – particularly your first car – is a step toward your own independence. A car is oftentimes an extension of your personality and goals, and a gateway to personal freedoms. So it can be a pretty important – if not, expensive purchase. Unfortunately, since it can be quite an important purchase, buying a car can be quite stressful – especially for a first-time buyer.
If you have never stepped foot on a dealership or used car lot, it can be intimidating. Choices are abundant. Oftentimes there are hundreds – if not thousands – of vehicles to look at, price tags to see and car salesmen potentially hounding you with questions. Needless to say, it can be overwhelming. But just like every new experience in life, it is best to come at it with some sort of plan. In this article, I am going to share a checklist of items that I have used to help me stay organized, on task, and unflustered while buying a car.
Checklist before going to the car lot
Before heading to a dealer, it is a good idea to do a little bit of preparation. This will give you confidence, save you time, and help you make a better decision before you even step on a lot.
1. Build a short list of vehicles
The easiest preparation you can do before stepping onto a dealership’s lot is to simply have a short list of vehicles you are interested in. This can be as broad as just knowing the body type of the car – such as a truck or SUV – or as specific as knowing the make, model, year and trim of a vehicle. By simply knowing what you are interested in, you can reduce the number of vehicles to look through and therefore get to buying the right vehicle for you faster and easier. Know that this list does not have to be iron-clad. In fact, being flexible – especially on the year and trim – will often lead you to a vehicle that you like better and might actually save you money. Having a list ahead of time just gives you a focus and a purpose before heading onto a car lot.
2. Determine what you are able to afford
Knowing what you can and cannot afford will help you immensely before stepping onto a car lot. Know that most car salesmen will try to upsell you. Knowing your maximum limit and looking for a vehicle well under that will help you not overspend. Here at AskingDad.com, we also encourage you to always try to buy a vehicle without taking out a loan.
Car loans typically come with a high-interest rate, and strings attached – read that as “early payoff penalties.” Apart from the high-interest rates, vehicles also decrease in value immediately after they are driven off the lot (an average of 11 percent). As such, taking a loan out for something that loses its value so quickly, is generally not a good financial decision. Cars salesmen will try to convince you to take a loan out because of the “low” monthly payment. However, while it might look “low,” it is actually just a way to keep you in debt and strapped for cash for years to come. Knowing what you can afford and sticking to it, will help keep you financially secure.
In some cases, it is unavoidable to get a car loan – especially when starting out. I had to do it myself. If you have to get a car loan, try and pay for as much as you can upfront without digging too much into your emergency fund. Also, look out for those “early payoff penalties,” and try to negotiate them out of your loan. An early payoff penalty is exactly what it sounds like. If you pay off your loan early, you will have a fee – how absurd is that? The thought of paying a fee for giving someone back their money is ridiculous, and you should look out for it whenever negotiating a loan. Finally, make sure to factor in the interest rate of the loan. Just because the monthly payment looks good, does not mean that you are getting a good deal. A five percent APR can add hundreds if not thousands to the overall cost of your car after the loan matures.
3. Find car dealerships to visit
The last preparation step is easy- ask around or use a website/app like Cars.com or Autotrader to find a couple of dealerships to visit. This is a good way to find a decent dealer who has the vehicles you are considering and it will give you a quick idea of the potential cost. When looking at the cost of the vehicles, know that the advertised price does not include taxes and fees. As such, the on-the-road price could be higher by quite a bit depending on where you live. On the flip side, you also may be able to talk them down a little, but do not expect to knock the price down too far. Car dealerships do their due diligence on their pricing these days by comparing their prices to those nearby them and look at the Kelly Blue Book. They know the worth of their cars, so if it is underpriced, be wary, and be sure to be thorough on the steps covered in part two of this series.
After you have taken these few simple steps, you should have a good idea of what you want, how much you can spend, and a starting place to look. Again, be flexible. Know what are dealbreakers and what are not. Maybe a sunroof is ideal, but if not having one saves you a couple thousand dollars, is it really worth it? Maybe look at a model that is a couple years older, often the design has not changed that much and those few years can, again, save you thousands. This was all in preparation for the adventure coming up next. The next article will cover what you should look for and check while at the dealership’s lot. See you there!
Quote of the day: Success is where preparation and opportunity meet. – Bobby Unser
