Buying a new car can be done affordably

The purchase of a new car is often the most expensive thing you will do aside from buying a house. In order to make sure that you get the most out of your purchase, you should do some homework before you buy. You can also avoid being taken in a variety of auto sales scams that dealers often attempt to ply.

More below.

Purchasing a car or truck requires some research first

Everyone loves driving a new car, but no one likes buying one. There are good reasons for that - the process is a bit mysterious, as you never really have a good idea of how much you should pay. And the cost of financing can be all over the map. And dealers can add all manner of extras to the price. For most buyers, it’s all a big mystery and it is a mystery that few people enjoy. It doesn’t have to be like that, however. With a little bit of work beforehand, you can walk up to the dealership with a good idea of what the car you want will cost and how much you will have to pay to finance it. It’s not a lot of work; you just have to know ahead of time what to do.

Most people do a limited amount of research before they buy a car, van or truck. That research is usually limited to having decided what make and model you would like to have. Perhaps you have picked out a color or decided what type of stereo you would like to have. While it is important to decide whether or not you would like XM satellite radio, it is far less important than doing the research on price and financing. 

Here is a short list of things you should do prior to visiting the dealership to purchase your car:

Check your credit report - Your credit score, also known as a FICO score, will determine the price you get for financing, whether you get it from the dealer or from a bank, credit union, or online lender. Your score can range from 350-850; the higher the better. If your score is below 600, you will need to do some work to improve your credit score before taking out a loan. Otherwise, you may have to pay sky high interest rates, and no one wants to do that. An additional reason to know your credit score is that you can avoid a popular interest rate scam where the dealer assumes, often correctly, that you don’t know your score and therefore won’t mind it when he tells you that you’ll have to pay a higher rate.  Check your credit report and know your score.

Line up your financing ahead of time - You can certainly obtain financing from the dealer. Many people discuss the make, model and price with the salesman and then add, “Uh, can you finance this?” Of course they can finance your car. But should they? What rate are they offering you? Could you do better elsewhere? You won’t if you haven’t bothered to check first. Start with your credit union or bank, then check with online auto lenders. Eloan, Capital One Auto Finance and others offer online auto loans at competitive rates.

In part 2 of this article, we will discuss additional things you should do before you show up at the dealership looking to buy your car. The more prepared you are, the better the deal you will receive.

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