Car Buying Strategies - Things You Should Know Before Buying a Car
Effective car buying strategies involve many things you should consider before you visit a dealership. For example, there is likely some work to be done with new car pricing research. Take time to gather details about incentives and financing offers. The deals may look attractive. However, they could cost you more money in the long run.
This article shares a series of car buying strategies and pricing considerations so you can arm yourself with as much information possible. Applying these car buying strategies is your opportunity to become an informed and educated consumer. Follow these strategies and help ensure you get the best deal on your next vehicle.
Car Buying Strategies #1: Typical Dealership Pricing StrategyOnce you've decided on what kind of car(s) you are interested in buying, it is time to begin your new car pricing research in earnest. When doing so, you may learn of a popular new car pricing strategy at some dealerships called "invoice pricing". A typical car dealership may tell customers they are selling cars for the same price they paid to the manufacturer to receive the car(s) into inventory, i.e. the "invoice price". And technically ? this is an accurate definition of invoice pricing.
However, what a typical dealership often does not tell you is that they are receiving some form of incentive(s) directly from the manufacturer during this promotional period that offsets the breakeven price that the dealership incurred by selling the car to you at "invoice". With that said, it is savvy to research a dealer's invoice price to keep a typical dealership honest. The downside to these types of special offers is that they tend to be short-lived and cannot be sustained.
In the end, one of your best car buying strategies that will likely save you more time, money, and frustration will be to work with a quality dealership that operates from a best price philosophy. Customers receive the dealership's lowest price every single day, without negotiating, or having to wait for special incentives from the manufacturer(s).
Car Buying Strategies #2: Don't Forget to Research DealershipsFinding out as much as you can about the dealership(s) you are evaluating is one of the car buying strategies that will save you money and frustration later on. Asking your friends and family to get a first-hand look at how they were treated by the same dealership(s) is a great place to begin your research.
A good dealership realizes that satisfying customers is a critical aspect of good business. And one of the best forms of advertising in the car business is word-of-mouth, i.e. car dealer ratings. There are a number of websites (Google is one of them) that provide reliable car dealer ratings. Working with a fair and ethical dealership will make your experience smooth and efficient.
Car Buying Strategies #3: Know Your Credit RatingOur next in this series of helpful car buying strategies is to get a copy of your credit history in advance of applying for financing. Knowing your credit rating and scores can give you an idea of what it will cost you to borrow money to fund your new car purchase.
The Fair and Accurate Credit Transaction Act of 2003 allows you to get a free copy of your report from the three major credit-reporting agencies (TransUnion, Experian, and Equifax) once a year. Rest assured, even if you have bad credit, no credit, or not a lot of savings -- it is a smart strategy to approach a dealership and discuss your situation. You have options -- and the right dealership will help you navigate a set of alternative car buying strategies to improve your credit score so you can achieve the outcome you are looking for - a quality vehicle.
Car Buying Strategies #4: Know What You Can Realistically AffordGetting your own financing directly through a bank or credit union can sometimes save you money versus financing your purchase through a dealership. However, sometimes auto manufacturers offer 0% promotional interest rates through their dealerships, which are clearly very attractive. Either way, it is a good idea as part of your car buying strategies to consider how much car you can realistically afford.
For example, it is a good rule of thumb to make a 20 percent down payment. A 20 percent down payment will help reduce your loan payments significantly, but perhaps more importantly, will help keep you from owing more on your loan than the car is worth as it depreciates. And finally, you need to ask yourself the hard question of "Can I afford my monthly car payments along with insurance, gas, maintenance, and other costs?"