Buying Your New Car

In order to avoid the pitfalls of buying a new car, you merely need some knowledge of the business. To protect yourself, you need some information as to the tactics of the average automobile dealership. Here are some practical ideas to assist you in your new car purchase.

What to Do Before You Go to the Dealership

• Determine if you can afford a new car. The total of all your debt shouldn't be more than 40 percent of your monthly take-home pay.
• Shop for financing first. A credit union tends to lend more money than a bank and generally offers more favorable rates. Credit unions also have arrangements with local dealerships, offering member-only sales.
• Decide exactly what you want this car to do for you. How many people will you be carrying? What options do you want in order to be comfortable? Know exactly what you want before you set foot into the dealership and stick to it.
• Research dealerships. Make sure that you find one close to you. If your vehicle needs service, it will be much easier to establish a relationship with the service manager if the location is convenient.
• Know the car you want to buy before you go shopping. The Internet is an excellent way to find information. There are numerous sites specifically for supplying consumers with information on the make and model of the car you want to buy. Most sites include information such as dealer price, equipment listings, specifications, safety features, and warranty details.
• Find out how much insurance is going to cost for the new vehicle. If you can afford the car, but you can’t afford the insurance, then you should purchase a different vehicle.
• Try to determine the actual value of your trade-in. Use the market guide books for an estimate, and then visit various used car lots to get a bid on the car.

When to Visit the Dealership
Automobile dealers usually pay their sales staff a commission based on the amount of gross profit the salesperson develops from the sale of the vehicle. In addition to commission, there are usually monthly volume bonuses that are paid when a certain number of cars are sold. By the end of the month, the sales staff is eager to reach the goal in order to collect substantial bonuses that are offered. Late in the month is the time to make your grand entry into the dealership to negotiate a fair deal.

What to Do When You Arrive at the Dealership

• Take the vehicle for a test drive to see if it lives up to your expectations.
• Don't give the dealership your driver's license or social security card. This will enable them to run a credit check while you're out driving around. Instead, make a copy of your license and write on it that the dealership is not allowed to run a credit check until you have approved it in writing. Make sure to get the copy back before you leave.
• Ask the dealership if there are any unadvertised incentives that they are sharing with customers. You can also research this on the Internet before you make the trip; many Web sites list the rebates and incentives that are currently offered for specific cars.
• If you are asked to make an offer, refuse until they commit first to a best price. Then, you may counter-offer with a figure substantially below your best price. Work from there to the maximum you have set for yourself.
• When you give them the keys to your trade-in, tell them that you want the keys back when they are finished with their appraisal. When they return, do not continue to negotiate until you get the keys back. This way, should you decided to get up and leave, you don't have to wait while the salesperson stalls you just to get your keys back.
• Do not give any money to show good faith. You can show good faith when they reach a price you can live with. Good-faith money is another way to intimidate you and keep you from jumping and running before they have reached their best price.
• Never buy the first time you go into the dealership. Once you've signed a contract, you're stuck. It's always a good rule to "sleep on it" at least one night.

How to Handle Your Trade-In
Your trade-in will usually cause the most haggling during your new car purchase.

• Remember to tell the salesperson that the negotiating is over until you get your keys back. Some dealerships will appraise your vehicle and then keep the keys locked in the sales manager's office. This is an intimidating trick to keep you from leaving when you want to. Simply tell the salesperson that the negotiating is over until you get your keys back.
• Keep in mind that during this transaction, you are also a salesperson. Call it a trade-in, but you are selling a vehicle while trying to buy another.
• Clean your car so that it’s spotless. Be assured that the appraiser will go through the glove box looking for any personal financial information. Keep brochures from other dealerships in there, letting them know that you've been shopping around.
• Put any maintenance receipts for tune-ups and oil changes in the glove box. They will impress the appraiser and they will be found.
• Keep the price of the new vehicle and the price you want for your trade-in separate. Don't allow one dollar amount to depend on the other. If you don't get what you want for your trade-in, the new car salesperson won’t lower the price on the new car to make up the difference.

Financing Your New Car

• Explore all of your financing options—including your credit union. Some dealership finance companies offer low rate specials, but you should examine the terms involved. Most likely you'll have to pay 40 percent down and finance for only 24 months. Instead of financing through the dealer, talk to your credit union’s Member Service Representative about a loan.
• Do not give the dealership a credit application until you know for sure that you are going to finance through them. Make sure that you have exhausted all other sources including your local credit union. A little extra time shopping at your local credit union may save you a lot of money. If you do apply through the dealership, and then try to go somewhere else for your loan, you may find that you have a number of inquiries on you credit report. This makes it look like you weren't approved for other loans and each lender thinks the others know something bad about you.
• If you finance at the dealership, never take delivery the same day. Pick up the car only once you know that the financing is absolutely final.
• Always check the dealer’s numbers carefully, and don't sign the paperwork until you are positive that the numbers are correct. Remember, once you've signed, you rarely can get out of the deal.

Taking Delivery of Your New Car

• Walk around the vehicle before signing the papers. Check for nicks, dent and scratches that will forever be yours unless you point them out now. Check to make sure that all the features, such as inside and outside lights, work.
• Ask to meet the service manager and ask him about recommendations for service and maintenance. Also, check to see if all recall procedures have been performed on your car.
• Make sure that the options you ordered are present and written in the contract. Also, check to see that extra options haven't been added to the car. Be assured that you will pay for these. They are not freebies even if you didn't ask for them.
• When reviewing the paper work, make sure that vehicle extension (such as LX, ES, or GT) is written next to the car model. You want to make sure you’re paying for the right car, not a cheaper model.
• Make sure to carefully read the contract, checking for any blank spaces. If there are blank spaces, have them filled in with the number zero.
• Don't sign anything until you are sure you understand everything that is written. Most likely, this will be the last time you can question anything and still be able to change it.

Now that you've taken all these tips into consideration, car buying can be a fun and exciting experience. Buckle up and enjoy your new car.
 

 Article provided by CU Village.com through its Financial Resource Center content product.