After working about 6 months in your first job, you plan to buy a car. Or your parents would like to buy you a car after your college graduation. Whatever is your situation before you buy your own car, you must make some research and preparations before you go to the different car dealers' showroom.
Kind and Cost of Car. Determine at least 3 different models of the cars you want to own as you saw on classified ads, TV or Internet. Visit some websites like Cars.com, ConsumerReports.com, Edmunds.com, Kelly Blue Book, and other car websites to see and compare the car features, gas mileage efficiency and prices.
Car Insurance. Visit at least 5 car insurance websites and compare the insurance premiums for the 3 different car models that you want.
Credit Score. Request for a free copy of your credit history from one or all of the following national credit bureaus to find out your credit score. If your credit score is 750 and above, you may get a lower interest rate. If your credit score is below 750, you may get a higher interest rate.
Credit Union or Bank Auto Loan. Become a member of a credit union by opening a checking or savings account. Or, you can go to any commercial bank to open a checking or savings account. Consider to become a member of a credit union because credit unions normally offer lower auto loan interest rate than commercial banks. Apply for a pre-approved auto loan before going to the car dealership.
After you have gathered the above information and got a pre-approved auto loan from a credit union or commercial bank, consider taking a relative or friend who had previous experience in car buying to help you in negotiating for a car in the car dealership.
While you are in the car dealership, you must consider the following smart actions to take:
1. Focus on the price of the car. Ask the car salesman some paperwork on the Dealer's Actual Cost (DAC), which is the actual price the dealer paid to the car manufacturer. The DAC is lower than the MSRP ( Manufacturer's Suggested Retail Price) by about $1,000 or more. If you can negotiate for a lower MSRP, let's say $400, then you will have a good deal.
2. If you agree on the car price, ask the dealer what interest rate you will be charged for let's say a 3-year term loan. If your credit union or commercial bank offers a lower interest rate, then tell the dealer that your bank will pay for the car.
3. Do not buy any types of insurance coverage from the car dealership because they are more expensive due to the fact that they receive commissions from the insurance companies. Buy directly your car insurance from a reputable insurance company.
4. Do not buy extended warranties. Car dealers make a lot of money in offering car extended warranties. Remember that car manufacturers built their cars with the purpose of making the cars to be reliable and last longer.
5. Do not purchase any car add-ons such as fabric protector, paint sealant, paint protection, undercoating and rustproofing. Most cars come with a 6-year/100,000-mile rustproofing warranties. Car dealers will try to sell you on an $900 rustproofing treatment that cost them only $50.
When you implement the above recommendations, you will realize that you will save a lot of money in buying your own car.
Quote for the Day:
“ Now He who supplies seed to the sower and bread for food will supply and multiply your seed for sowing and increase the harvest of your righteousness”. (2 Corinthians 9:10)
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