The end of 2009 is approaching and we all know what that means: Time to buy a new car!
It's commonly believed the two best times to buy a new car are the last two weeks of December or July to October. As a new year approaches, car dealerships are eager to make room for new models, which means they want to get the old cars off their lots. As a result, you'll often find better prices and bigger incentives.
Unfortunately, many common and costly pitfalls await the new car buyer. Here are nine points to ponder before you make a purchase.
1. Select the model that's best for you: A bevy of web sites can help you narrow down your decision. Visit such sites as autoweb, consumerguide.com and NPR's expert Car Guys. Manufacturers' web sites provide detailed specifications on new cars.
In addition to selecting a make and model, look at available incentives and rebates and whether they would apply to your purchase.
2. Work the competition: Once you've narrowed down your choices, research prices at a variety of dealerships. Begin by establishing the Kelly Blue Book price. The KBB is the standard for new and used car prices (and also a good place to research the worth of your trade in). Either visit car dealerships in your area or visit their web sites to check out offerings. Request quotes on specific cars or see the Manufacturer Suggested Retail Price (MSRP). Once armed with this information, it's time to make the rounds.
3. Ask for a test drive: A test drive allows you to see if the car you've chosen "on paper" is the car you actually want. Take trial spins when you have plenty of time to get all the information you need. Begin by examining the exterior and interior, then simply getting into and sitting in the car to see if it works for your body size. Familiarize yourself with the controls and test all systems before leaving the lot.
You -- not the salesperson -- should establish the route you take during the test drive. The salesperson will want to launch into a pitch as soon as you leave the lot. Instead, ask questions only when you need to, and make it clear you're not listening to the salesperson's ramblings. You'll want to drive different terrains, do a bit of both city and highway driving, test the car's ability on turns and make lane changes to check visibility.
4. Don't be afraid of negotiating: If you go into the dealership with a good idea of the car you want and how much you want to pay, the negotiating is up to them, not you. You've done your homework and now the dealer has to work towards your magic number. Once you've negotiated a good price, ask the salesperson to fax you a worksheet detailing all the prices, taxes and fees. Bring this worksheet with you to the dealership and compare these numbers to the contract.
5. Watch out for add-ons: After you've decided to buy a car, the salesman may start asking you to pay a variety of extra charges. This can mean hundreds or even more than a thousand dollars. Don't fall for these tactics. You agreed on a price and you should stick to it. Don't be afraid to walk out if you feel you're being treated unfairly.
6. Trade ins: Car dealers can make tons of money by paying below-market value for trade-ins, then reselling them for much more. Do your research to gain a realistic idea of what your trade-in is worth. If you have a down-payment and a trade-in that's in good condition, consider selling the car on your own. You might get a better price for it than as a trade-in.
7. Find financing that fits: The key to a great deal is to get the best price on the car and the best possible financing, usually a combination of a down payment and monthly payments. To pay as little interest as possible, you'll want to make your down payment as high as possible. It helps to know your credit history before you begin.
The low Annual Percentage Rates (APR) advertised by dealerships and car companies usually only apply to people with perfect credit. An advertised low APR also may be an introductory rate that will go up in time. An APR of 1.9% sounds great until you realize it applies only the first year of the loan. You want a low rate for the entire period of your loan.
If you meet the car dealer's financing qualifications, you may want to finance the car through them. Alternately, you might finance your car through a bank, credit union or online financial service, such as ELoan, Lending Tree and PeopleFirst. Just make sure you read ALL the fine print.
8. Final inspection: Most dealerships will detail the car and fill the gas tank for free. You'll have one more chance to inspect the car before taking possession. Walk around the entire car and look for scratches in the paint and wheels or dents and dings on the body. Make sure floor mats, a spare tire, etc. are included if you're paying for them. If anything is missing or if any work needs to be done, ask for a "Due Bill" that puts it in writing. You can then come back and get the work done later.
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