Buying a car is something that should never be done without planning. As this is an expensive purchase, you need to put a certain amount of thought before spending your hard-earned money. There are certain things to consider before buying a car, so make sure that you take plenty of time before zeroing in on a final decision.
So, here is a word of advice for those scouring showrooms to buy new cars.
Decide your budget: The first and the most important step while buying a car is determining how much you can spend. You might be planning to buy your dream car; you cannot get that home unless it is easy on your pocket. According to a thumb rule, the total expenditure on the car including fuel expenses, insurance premiums, and maintenance costs within a household should be 25% of the total monthly income. Therefore, you need to fix a monthly budget that does not hamper your bills payment, savings, and other regular expenses.
Choose between a new and used car: After fixing your budget, you need to decide whether you want to buy a new car or a used car. You can weigh all the pros and cons of buying both the type of cars and then choose according to your requirement. Then, you need to evaluate if the chosen car type fits your budget by calculating the cost of ownership of the car.
Decide the kind of car you want: You should choose a car that best fits your lifestyle, current requirements, and taste. Jot down a list of the features and specifications of the car that you are looking for such as seating, comfort, convenience, performance, and safety features. You also need to decide whether you want to opt for a car with a diesel or petrol engine. Based on your budget and your preference for an old or new car, you will have to narrow it down to a few cars makes and models. Next, you can make a list of additional features that you would like to have in your car such as a sunroof, surround sound systems, heated seats, etc.
Check the resale value of the car: When buying a new vehicle, you should check its resale value as well. This process will help you the most when you want to sell it during a financial crisis, or you are looking to upgrade in subsequent time.
Secure your finances beforehand: One of the biggest mistakes that people commit while buying a car is not looking for different financing options before visiting a car dealership. As most of the dealerships provide car financing options to purchase your car at a higher rate of interest. Therefore, you need to check and compare the rate of interest offered by banks and other financial institutions to select the best rates that suit your current needs and repayment capacity.
Take a test drive: After you have identified a few cars that might fit your needs and budget, take each car for a test drive to see how you feel in it and how it performs. Try to drive all the cars you are considering on the same day, so it gets easier for you while making comparisons. It is a good idea to call ahead and book your appointments to structure the day. It will further help you to gauge the customer service at each dealership.
Negotiate the prices and terms: Cars are one of the greatest assets of an individual after property holdings. Therefore, you should negotiate the terms and prices as much as possible to get the best deal before investing. Negotiating the price of the car will help you bring the car loan down and can save you money in the long run.
Focus on the total price instead of monthly payments: You should be very cautious while buying a car as it involves a long-term financial commitment. Do not fall in the trap of salesman and say yes to a low-cost deal with a long tenure since they might end up costing you more. Make sure you learn about the total price of the car including the hidden costs such as dealership costs, delivery charges, taxes, and car preparation. Most of the dealerships do not disclose these additional charges unless the buyer enquires about them.
Refrain from mentioning your trade-in: If you are planning to trade-in your old car for a new one, do not disclose your intention of doing it till the end of the buying process. If you will mention it in the beginning, dealerships might use this information against you and offer you a deal after factoring the price of the trade-in car. Therefore, you should negotiate the cost of the car and the trade-in separately to get the best offer.
Avoid purchasing any add-on: Since salesmen earn commissions based on a percentage of the sales price, they might try to persuade you to buy add-ons along with your car that will increase the total cost of the car. You should try to keep the additional costs to a minimum by avoiding any kind of accessories or add-ons such as heated seats, rust proofing, rear camera, VIN etching, and dealership maintenance plan.
Do not buy an extended warranty along with your car: The extended warranties offered by dealers are costly and provide minimum coverage. Be it a new or used car, such warranties do not cover mechanical failures. So, while purchasing a new car, make sure that it has a manufacturer’s warranty that covers the maximum damage costs.
Get the used car checked by a mechanic before purchase: If you wish to buy a used car, it is wise to get it thoroughly checked by an automobile expert. By doing this, you will not only become aware of the car's condition, but you will also learn about any existing or potential concern that you might face later.
Do not go for impulse buying: Buying a car is a huge investment, so it is recommended that you should not buy a car just out of impulse or without any planning. Purchase a car only after performing extensive research on the market so that you do not regret your decision later. If you check all the financing options available, as well as about the cars present in the market, you will be able to buy a car that you can enjoy for many years, without becoming a burden on you.
Purchasing a car while maintaining other finances: Buying a car can be a herculean task especially when you are repaying other debts. If you are already paying off a car loan, taking out an additional loan might impact your monthly income and savings. Therefore, purchase a car only after paying off your previously taken car loan would be a much better decision.