Little background on myself – I am 21 and make about 35k a year in the St. Louis MO area and I’m looking to buy my first ‘new’ car. for the past 6 years I have been driving the car i bought outright for 1500 dollars, so it was a simple transaction.
Now I am able to actually afford it, I would like…
Beanie has some great suggestions, and if she hadn’t made them first, I would tell you the same. Be an educated shopper and know what the values are on the car you are looking for and what the value is on your trade in. Just remember, what you will get will be estimates and basically a guideline. Kelly Blue Book and Edmunds are the best sites to get information from. But please remember that there are costs that (Edmunds I know doesn’t) include destination charges or advertising charges. No mater where you are, or where the car is built, there are destination charges for all new vehicles. And it is the same country wide. If you buy a new vehicle in Montana, and it is made in Florida, the destination charge would be the same as if you went to a dealership in Florida. Also if the dealership participates in their brand advertising, that is also included in their factory invoice, and Edmunds does not include that either. (Advertising isn’t much, destination differs from make to make and model to model.)
As far as credit issues, don’t go into a dealership thinking you have bad credit. (They will use that against you, even if it is good!) Let them run the credit check and find out for themselves about your credit. And ask them. At that point, you will have to sign a credit application, but that’s it. Don’t let them talk you into signing anything else.
My only addition to Beanie’s ideas are whether you buy a new or used car or truck, buy the vehicle, not a payment! Don’t let the sales person or the finance person talk you into a certain payment. Typical line is “you can afford $$$ a month.” Don’t fall for that trick. You could find yourself buying the vehicle plus a warranty, insurance, etching, and things you don’t necessarily want. It will all be included in “what you can afford a month!!” So get the bottom line of the vehicle, get your interest rate and the term (how many months) and trade value, then work out a deal. And if you don’t feel right about it, walk out and go somewhere else. And absolutely NEVER sign anything without reading it first, understanding it first and knowing exactly what you are getting. And NEVER sign anything that has any blanks. Have a question, ask, if they don’t or can’t give you a straight answer, leave. There are other places, other dealerships and lots to chose from..and they know it. If they value you as a customer they will work with you. And if they don’t, then they don’t deserve your business!
One other thing, if it is a used vehicle, get a mechanic to look at it. Don’t rely on what they say, tell them you want your mechanic to look at it. If they give you a hard time…well then it’s time to leave!
If you are unsure about anything, don’t sign anything. You can leave a refundable deposit, but make sure it is refundable if you decide not to purchase. Go home and think about it or talk to someone else about your choices. After all it is your choice and your decission.
With Beanies information and mine, you should be on your way in no time.
Getting the best deal when buying a car or truck is very easy.
I have used the below technique for many years when buying cars/trucks.
Find the MSRP of the car/truck new or used for that model, year and options.
Multiply that MSRP by 70% this would be the Wholesale price .
Multiply this number by 112.5 % and this will add back on 12.5% overhead and profit for the dealer.
If your buying a used car/truck take the mileage and multiply this by .35 to .40 cents per mile based on the condition of the car/truck and subtract from the above math.
Go into the dealer to test drive your possible
future car and when you get back to the dealership start your offer with the math above.
Dont show any emotion towards buying the car/truck.
Simply write your number (from the math above) on a
business card or scratch paper along with your phone number and tell the salesman that if they want to sell the car/truck contact you.
Dont haggle, get in a huff or show any other emotion. Simply state to contact you if they are interested in selling the car for “your” price.
I am telling you this works on all cars and trucks new or used./ been using it for over 20 years.
I just priced a new truck and they are giving quotes right next to the numbers calculated above.
This tells me that you can even do better than the math above right now in this crappy car market.
maybe add back 4% vs 12.5% and start there
Take the emotion out of truck and car buying, use the math above and you will always “Always” get the best deals and it will be a rewarding experience to boot.
If your in control (in the showroom) you can make these deals consistantly
I would also recommend waiting. I know you’re eager to dump the beater (hey, that rhymes!)….but you will be in a much better situation both financially and in terms of negotiating power if you can put off a new car till fall.
Step 1) Know your credit score. You can get a free one at www.annualcreditreport.com, and lots of other places with similar names will try to sell it to you. I have a WaMu credit card and one of the free perks is monthly access to my FICO score (and an alert if it changes by more than 20 pts). If you don’t know your score, the dealership will try to make you think it’s much worse than it really is to gain more interest $. If the biggest problem with your credit is that you’re young, build some credit by opening up a secured line of credit…some kind of credit card that you use (CAREFULLY) and pay off in full each month to show your trustworthyness. Read terms carefully and go for something with low APR. This may, over several months, raise your score somewhat. If your credit problems have to do with debt….then by all means pay off that debt and reevaluate whether you have the funds to purchase a car.
Step 2: Go to KBB.com or edmunds.com and determine the value of the car you’re currently driving. If you have a realistic number then you can determine where to go from there. Trading in at the dealership is more convenient, but you’ll make more through a private sale so that is something to consider.
Step 3: Do the same for the car(s) that you would like to purchase. Look up the invoice prices, the true market value, and the trim options. Right now I’m hoping to purchase a small SUV with a sunroof (I’ve really, really, really wanted one of those all my life, and I’m 32 and have worked hard so I feel I deserve one….but I may not actually get one if it’s going to be an additional 3k for a package). Then start googling dealerships in your area and looking at their inventory. Odds are you won’t find your dream car listed for under invoice…so this will take some time and careful searching.
Step 4: Put all the money you can into savings to build up your down payment. It’s flat out stupid in this economy to drain your account for a car purchase, so you’ll want to have enough in your account for a cushion, beyond what you’re hoping to put down. It’s not reassuring that you’re wanting to put the ttl (tax, title, and lisence) on a card….factor these costs into the price of the vehicle and when you get quotes tell them you are only negotiating the ‘out-the-door’ price. I think this part is the key…you really need a lot of available cash before you commit to a large debt. I’m not one of those people who says you should never purchase a car unless you pay flat out in cash..but you really should have a safety net. Of course, easier said than done…but if you can drive your vehicle for a few more months, then that’s a few more months of no payment on yours while you add to your savings. It is a buyers’ market, but nothing will change so drastically in the next 10 months that will alter your ability to buy a car (except for your personal financial situtation, which you can improve). If I’m wrong and the economy completely collapses, then we’ll all be grateful that we still have wheels, regardless of their condition. If the heater is the worst problem in your car, you won’t need it during the summer anyway. Don’t fall for those places that promise $4000 if you can ‘push, pull, or drag your car in’ as they just overcharge you by $4000. Technically, you might save money before the end of the year…but if you’re not prepared then you will be overcharged anyway. The sales tactic is ALWAYS to tell you know is the time to buy. Doesn’t mean it is unlesss you can afford it.
Step 5: I would spend time reading the online articles at Edmunds.com and other similar sites on how to negotiate and tricks of the trade. If you buy used, you definitely save on depreciation costs, but you risk getting a lemon if you don’t buy certified or get an inspection. Most brands have several thousands off of the year end models come fall. There are thousands of articles on how to determine your budget, scams and tactics to avoid, issues you should think about, and general ‘what can I afford’ calculators.
Most of all, don’t buy what you can’t afford and don’t commit to anything unless you have personally done the research. Good luck!
I recommend waiting. The bailout is not going to do anything to stimulate sales. In the dead of winter in Missouri they will be hungry to sell a car in February.
I recommend spending some time on carbuyingtips.com. Thay have tons of info on buying a new or used car.
Also, don’t rule out buying from a private party. A 2-4 year old used car will be just as reliable as new and cost alot less than new. Craigslist is a great place to locate private party sales.
Simply take someone with you who will do the haggling for you. All car dealers and private sellers are desperate, it is a buyers market, just hit them hard !!
Be careful!! I’ll link a few articles that should help you big-time. It’s way to much to explain on this little post. Here they are (linked below). I hope this helps!