cropped Buying a Car

Car FAQ: What to Know Before Buying a Car

Shopping for the right car can feel a lot like speed dating. You’ll find some cars that are elegant and stylish but are out of your league financially. Others will have great performance but won’t quite share your enthusiasm for saving the environment. One thing is certain: when you find the right car, you’ll know. Until then, here are some things you should determine before buying a car.

What’s the Reason for Buying?

If you plan on packing your car with snowboards and driving up snowy terrain in the winter, then a mid-size SUV might be your speed. If you rarely use a car outside of your regular commute, prioritizing fuel efficiency could be helpful. Take some time to write these reasons down. Then try to match each purpose with a specific feature of a car. This will tell you everything from four-wheel drive to fully electric, minivan to mini cooper.

What’s the Size of your Budget?

To allocate the proper amount of money toward your car, you must first understand your financial situation. Much like buying a house, the amount you can afford upfront will significantly lower your loan’s interest rates and the total cost of the car.

Take a look at your budget and see whether you can afford $2,000 or $20,000 on a down payment. Knowing this number can help narrow in on the type of vehicle you’re looking to buy. If you’re on the lower end of the financial spectrum, finding a used car with low mileage might be more affordable. Have a little more to spend? A brand-new car could be the right call.

Research Multiple Local Dealerships

Shopping locally is always better than having a car shipped in. Shipping and handling fees can be expensive, sometimes upwards of a thousand dollars. Even more if it’s coming from overseas. Be sure to research dealerships in and around your city. You don’t have to drive across multiple state lines to find the best deal. But if you’re looking at a Mercedes Benz dealership in Houston, then you should also check with Austin and San Antonio and even Dallas. You might find that a few hours of driving results in thousands of dollars in savings.

How to Get a Car Loan

If you’re looking to buy a car, especially a new one, you’re probably going to take out a car loan. Finding one that has a low interest rate and a flexible payment schedule depends on a few different factors.

  • Your Credit Score – Banks, credit unions, and car dealerships use your credit history to determine what financing you can apply for. Use one of the many free credit checks online to know your score beforehand. It might be beneficial to take a few months increasing your credit score before attempting a car loan.
  • Bank vs Dealership – Both will offer financing options, but if possible, you should always choose to finance a car loan with your bank. The dealership has its own interests in getting as much money out of the deal as they can. Your bank, on the other hand, just wants the loan paid back in full. They don’t care what the loan is used for.

Do You Need Insurance?

Short answer: yes. Long answer: yes, seriously.

It is illegal in most states to drive uninsured. And in some states, it is considered a criminal offense. Beyond the legality of the matter, it is financially advisable to be insured even in states where it’s not required. Getting into an accident could mean paying for your car’s expenses out of pocket as well as any damages done by the party at fault.  

One accident can change everything, so err on the side of caution and make sure you at least have the minimum car insurance.

How to Negotiate for a Better Deal

It’s commonly assumed that the prices you see on a car lot are inflated for haggling purposes. While car salespeople, with their formidable exterior and no wiggle-room attitudes, will try to sell you on this price, learning to bargain can save you hundreds if not thousands on your car purchase. To negotiate better, you should:

  • Compare prices online before the dealership
  • Have a strict cut off price
  • Make a low offer and wait until they counter
  • Dress appropriately
  • Be polite and confident

Be as Knowledgeable as You Can

At the end of the day, finding the right car at an affordable price takes time and effort. Use online comparison websites to contrast different brands or vehicles. Ask friends or loved ones about their car buying experience. The more knowledgeable you are going in, the better your outcome will be.

2 thoughts on “Car FAQ: What to Know Before Buying a Car”

  1. Avatar of Brian Plain

    Hi Suprabhat Excellent article you make sure great points! In the Boston area, kids go out and just buy new cars they can’t afford. They might be able to afford the car but they didn’t realize the insurance could be as high as $500 a month till after they’ve signed the paperwork. It’s unfortunate it’s even more when they want to buy a used Mercedes Benz when they have non-prior insurance.
    Brian Plain recently posted…Old Home Insurance MassachusettsMy Profile

  2. Avatar of Samantha Reynolds

    These are topnotch tips Suprabhat! Some people who are looking forward to buying a car without thinking about it thoroughly. I couldn’t agree more with what you said here particularly researching about multiple dealerships and getting a car loan. At some point, people also fail to set a realistic budget, getting a bigger amount of car loans, resulting in higher debts. Being realistic and knowledgeable is important. Thank you for breaking this down so well.

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