Car Buying Tips

CarBuying Tips

Purchasing a new car requires some research. Before venturing out tothe car dealers Car Buying Tips

uninformed,you need to take a look at what you will need to know about the carbuying process.

First of all, about 70% of all new car purchases are financed. We haveput fort some car buying tips that will help ease the process of buyingyour New Car.

Last Updated - 5th October 2005

Determine your financial situation

This is the first and most important step in the car buying process.You must know how much you can spend before you can determine what youcan afford. You don't want to get stuck making a bloated car paymentthat will leave you desperate in a few years.

First of all, you need to have a monthly budget.Thisis very easy to calculate.

Add up all of your fixed monthly expenses, suchas your rent/mortgage, phone bill, etc.
Subtract that from your net income.
Then subtract your estimated extraneous expenses,such as food, gas, entertainment, whatever.
The result should be an amount of money you haveto play with.
From that, you need to remember that buying acar involves more than a down payment and monthly payments.
In your budget you will need to include licensing,registration and other hidden costs, as well as monthly insurancecosts, gas and maintenance.
Once you have all of this worked out, you shouldhave a figure of the budgeted amount you can use for car payments.A good rule of thumb is roughly 20 percent of your net incomecan be used for a car payment. Once you determine that figure,stay with it.

Decide which car you want

Now that you have settled on a monthly allotment, now you can lookat which vehicles fit into your price range.

This is really about personal choice, but a good criteriato go buy is to look at what your needs are.

Do you have a family? There are plentyof affordable, safe and reliable minivans and station wagons onthe market. Single and commute, or
Do a lot of city driving? The compact segmenthas a wide range of models to choose from that boast handlingand superior gas mileage.
Do you use your vehicle for work-related tasks,such as hauling, delivery, etc? Check out the many light andheavy-duty pickup trucks and vans.
Midlife crisis? There are several convertiblesand sports cars that will make you feel young again. Also consideryour wants. Compact cars get really good gas mileage and are agreat if you want to save money on the increasing gas prices.
Plan on taking road trips? Consider somethingthat gets good mileage and has cargo space and lots of cup holders.
Plan on going off-roading? The SUV is yourbest bet. Some even come with a first-aid kit!

Once you've narrowed your choices down to a couple,it's time to do some car research.

Do your homework

Here's where you will need to spend some time sorting through somedetails, but it will be worth the effort in the end. After all, themore you know about what you're buying, about whom you're buying from,and about the buying process itself, the more money you will end upsaving. There are plenty of places for you to do your car research.Check out the Internet and newspapers, contact car dealerships, creditunions and local banks to see what kind of deal you can get.

Knowing what a car dealer's competition is offeringcan only help you out in the negotiating process.

Look at interest rates. You'll want to get the lowestpossible interest rate, as it will help you pay less in the long run.Many car buyers focus on getting the lowest possible down payment.If a car dealer gives you a low down payment, the money you are savinghas to be made back. Car dealers will find ways to lower your downpayment, and as a result will find ways to compensate for their generosity.By deferring the down payment "savings," with interest,you'll end up paying more in the long run.

Also be aware of factory-to-dealer incentives. Thesecret is that the manufacturer refunds a certain percentage of thecar's price to the dealer. So even if the car dealer sells you a carat the invoice price, he or she will still make money from the deal.Find out about a manufacturer's incentive percentage, as they arepublic information. You should also look out for rebates. When incentivesare offered, this often means the manufacturer wants to either getrid of slow-selling cars or reduce the inventory. Therefore, theymay also offer the buyer a cash rebate and a low financing rate, oran option of one of the two.

Go to the car dealer

Now that you have an understanding of what kind of rate you will beoffered, you now want to go out to the car dealers. You already havean idea of what kind of car you want, how much you can spend and whatkind of perks you can get. Also you have an idea as to what differentcar dealers are offering. This is quite a bit of information for youto carry with you into the negotiating process. But again, the moreyou know, the better off you'll be. But remember:

Car dealers are professional negotiators and do iteveryday.

You are a novice and will be treated as such.
The car dealers aren't going to be easy on you,nor are they going to point out all the ways you can save money.It's up to you to find all of those.
Also remember that you are in control at all times.You have the right and ability to stand up and walk out of theoffice at any point and the dealer will lose the sale.
Don't let a car dealer intimidate you. Be relaxedand comfortable you know all the information and that you holdall the cards.
Don't get Cheated over your car loan!
Did you know that car dealers, banks, and financecompanies profit handsomely from charging consumers with excellentcredit as if they were a bad risk? For most consumers, good creditis something you work hard to have. You make your payments ontime. You hold down a job, and are a financially responsible person.So–when you buy a car, you expect to be treated fairly, andget an interest rate that reflects your good credit, right?

Dealers and lenders have secret arrangements thatallow them to profit by charging you a higher interest rate than youdeserve. Then they split the proceeds, which are a windfall for them.They may even tell you "This is the best rate we could get. Weshopped it around, and this is the best we can do for you." Allthe while, they know you actually qualified for a much better interestrate. These hidden charges can cost you hundreds or even thousandsof dollars over the life of your loan. They can also lengthen thetime it takes for you to pay off your loan. Instead of having thatmoney for food, school tuition, medical care, a better car or truck,or other necessities of life, you end up giving it to the high-rollers.When finance companies allow dealers to raise the rates on millionsof transactions, they rake in hundreds of millions of dollars in excessivecharges.

How can you avoid being takenby this scam?

Shop around for financing before you set foot on acar lot. Your bank or credit union will probably give you more favorablerates.

Check out online lenders like eloan.com or peoplefirst.com.Eloan actually has a place on their homepage where you can find outyour own credit score for free, which will help you figure out whatyou should expect for a loan.