Car Shopping: Buy Smart

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Understanding how to buy a vehicle properly is as important as which vehicle you buy. Here are some simple steps you can take to ensure you get the best deal.

1. Acknowledge the fact that a dealership is a business that must make a profit just like any other business to survive. Consumers who forget this usually tend to not do their homework and rely on excuses as to why they feel they got “ripped off.” Also, keep in mind there are great Web sites for you to research different new and used vehicles. One excellent resource is Cartango.

2. Do your homework. Know how much you can afford. Go to your bank and sit down with a loan officer and discuss your needs with them. Be upfront with them and let them know what it is you want to purchase. Your bank can help you structure a finance plan that you can either go with or use as a guideline.

3. Do more homework! If you have a trade, understand that a dealer is never going to give you retail for it. They can’t or they wouldn’t make a profit when reselling it. Trade-ins are based off of “loan value” or below. If you owe more than the vehicle is worth, understand you may have to put some cash with the trade to offset being upside down.

4. Compare finance plans. Take a look at what the dealer is offering you as an interest rate. Keep in mind that the rate can be negotiated by as much as 3 points. In other words if the dealer presents you with an 8 percent rate, the finance company gave the approval to the dealership at around 5 or 6 percent. The finance company allows the dealer to earn money on the financing. This has been standard practice for years and in no way a “rip off.” It is standard business practice. Just know you can usually negotiate that rate by a couple points. The same goes for extended service plans. For used vehicles out of manufactures warranty, it is recommended you purchase one. Understand it doesn’t cost them the full retail price. They wouldn’t sell it if they couldn’t make a profit.

5. Know what your credit looks like. Most people think they have good credit when reality is they have a good credit score but poor credit. Someone with a 700 credit score is in debt up to his eyeballs. They couldn’t finance a dime if they put $0.08 on a down payment. Adversely, someone with a 500+ score generally owes very few people. Yes they are a higher risk and will have an interest rate accordingly, but they can afford the payment and thus makes them attractive to the lenders.

6. Be honest, realistic, and have fun shopping for your car. If you do your homework and are realistic about what you should be getting, then all you have to do is be honest with the dealer. They are there to assist you. They will do just that and you will walk away with a great deal. The dealer will love you and you will love them all because you were intelligent walking into their dealership. This can lead to a nice, long relationship where you can return later to buy another vehicle later down the road. You will be happier just by educating yourself.


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