Buying a Car? What You Need to Know Before You Go

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There’s no better feeling than driving off the lot with a brand new set of wheels! Getting a new car is exciting!

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But if you’ve done it before, then you know that buying a car isn’t easy.

A savvy buyer must know exactly what they’re looking for, and the preparation should start well before you ever set foot in a showroom.   Here’s what you need to know, before you go.

Check Your Credit History

This might sound like an odd place to start, but it’s important to get all your ducks in a row before you even consider what vehicle you intend on purchasing. Here’s why…

Most people who are purchasing a car will need a loan. In order to qualify for a loan, or one that’s affordable, you’ll need good credit history. Being aware of your credit will give you a better idea of what type of interest rate you can expect from lenders.

Haven’t checked your credit in awhile? Don’t sweat it. Every consumer is allowed one free copy of his/her credit report once a year from each of the three major credit reporting agencies.

Know The “Invoice Price”

Once you’ve decided on what car you intend to purchase, search the web for the invoice price of the car. The invoice price is what the dealer paid the manufacturer for the car; while the MSRP or “sticker price”, is the price the dealer intends to charge car buyers. As you would expect, there’s usually a very big difference between those two prices.

Now that you know the dealer’s profit margin, it’s your job to do a little negotiating!

Shop Around

While we’re on the subject of negotiating… Always be sure to get multiple quotes from several different dealerships. Never buy a car on your first visit to the dealership.

Test-drive the car(s) to ensure your heart is set on purchasing it, then walk out and get pricing from other locations (this can be done online and/or in other dealerships).

Know When To Buy

When buying a car, timing is everything. Car dealers run different promotions, depending on the time of year. December — particularly the last week of the year — is a slow time for car sales, making it the perfect time to purchase a car at a very attractive price.

If you don’t have the flexibility to wait until the end of the year, at least try to wait until the end of the month. At the end of the month, most dealers will accept lower offers to reach their monthly sales quotas (this helps them qualify for manufacturer bonuses).

And last but not least… You can guarantee yourself a fantastic deal by purchasing a vehicle at the end of a model year. Dealerships want to make room for the latest and greatest, so they will offer attractive pricing on the remaining inventory of the old model.

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Sam Cooper

Sam Cooper

Spent 10+ years in corporate finance before I realized how much more I enjoyed writing and advising people on how to achieve financial freedom. We all have different goals, what are yours?

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