If you’re in the market for a new set of wheels, or even thinking about it, there’s great news. You’re in command.
It’s never been easier to find your ideal car with today’s tools and resources at your fingertips. There are even services to buy vehicles online and have them delivered to you. That makes your car-buying mission a whole lot easier.
But finding your dream car for the right price means gathering intel and making an informed decision. So, what should you do before you buy? Here are a few tips to help you drive off with a great car, and get a deal while you’re at it.
1. Check-up on your credit
When you finance a car, your rate is largely determined by your credit. The better your score, the less you’ll pay in finance charges.
“It’s prudent to review your credit inventory and credit score before you begin shopping for a car. Being on top of your financial commitments and knowing your credit score will help you with the financing process,” says Joe Pendergast, vice president of consumer lending at Navy Federal Credit Union. “A good way to improve your credit score is by reducing debt, especially revolving and paying your bills on time.”
However, there isn’t an exact credit score you need for an auto loan. While it’s valuable to have your credit in a good place, it’s just one part of the finance process. “Beyond looking at your credit score, a lender also will consider things such as the loan amount being requested, debt-to-income ratio, and the collateral, if applicable,” adds Pendergast.
So, don’t be deterred if your credit needs improvement. Reach out to your lender and see if they’re able to work with you before you start shopping.
2. Do your homework on cars
Shop around and compare prices online. There are just as many deals out there as there are options for cars.
“Auto makers are offering incentives in an attempt to keep sales on pace with the last few years, but some of the zero percent financing offers are becoming harder to find. The best deals right now are in used vehicles. Nearly a third of all auto sales in the U.S. are leases, resulting in an increased supply of low cost, quality used vehicles in the market as lease terms come to an end,” says Pendergast.
Many franchise dealers are sweetening the pot by offering pre-owned certified vehicles which often come with many of the bells and whistles that new cars do, including free maintenance, a loaner vehicle and roadside assistance.
You may find your bank or credit union offers an auto buying service, too. Services like these are typically haggle-free, meaning vehicles are listed at their lowest manufacturer’s suggested retail price. If that’s your style, you may even be able to find and buy your car without ever setting foot on a dealer lot.
3. Get pre-approved
If you do plan to head to the dealer, it’s tempting to go straight there once you’re ready. Avoid doing this, as you’ll want to have a plan before you do.
The dealer can tell who’s done their homework and who hasn’t. If you’re not fully prepared to discuss and lock down the financing aspect of buying a car, then you shouldn’t be driving off the lot with one. The best way to avoid this is to secure financing from your bank or credit union before you visit the dealership.
A pre-approval can add to your negotiating power, too. It’s a good way to set a spending limit, as well as let the dealer know where your ceiling is. At the end of the day, it may even help you avoid spending more than you can afford.
4. Don’t feel like you have to make a quick decision
Buying a car is a big financial decision. Take your time and don’t rush the process. If you’re not satisfied with your options, keep looking around.
Remember, a car payment shouldn’t break your budget. You should have money left over for savings and other expenses after your payment each month. Rushing into a purchase you can’t afford could hurt you down the road.
If you’re looking to iron out the details, check out auto loan rates and auto loan calculators to get a sense for your affordability. Your best bet is to follow these steps and be prepared for the process.
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