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How To Buy A Vehicle

So at the dealership, Reed and Van Alst both say, the first step is to start with the price of the vehicle you are buying. The salesperson at the dealership will often want to know if you're planning to trade in another car and whether you're also looking to get a loan through the dealership. Reed says don't answer those questions! That makes the game too complicated, and you're playing against pros. If you negotiate a really good purchase price on the car, they might jack up the interest rate to make extra money on you that way or lowball you on your trade-in. They can juggle all those factors in their head at once. You don't want to. Keep it simple. One thing at a time.

how to buy a vehicle

NPR has a personal finance Facebook group called Your Money and Your Life. And we asked group members about car buying. Many said they were shocked by how much money some other people in the group said they were spending on cars. Patricia and Dean Raeker from Minneapolis wrote, "40 years of owning vehicles and our total transportation purchases don't even add up to the cost of one of the financed ones these folks are talking about."

"Shrunken inventory continues to wreak havoc on both the new and used vehicle markets," said Jessica Caldwell, Edmunds' executive director of insights "Shoppers who can actually get their hands on a vehicle are committing to never-before-seen average payments and loan terms."

These are far from normal times in terms of both the selection of cars available and the lack of discounts you may encounter. If you need a new vehicle today, we suggest starting your shopping process sooner rather than later, as analysts predict that the chipset shortage will likely affect pricing and inventory through this year and into 2023.

If you're shopping for a new or used car in today's difficult marketplace, please see "Car Buying Tips for 2022" for our experts' targeted, data-driven advice. Note that the article below was originally written before the chip shortage, back when vehicle prices were relatively stable and predictable. If the shortages continue, there may not be a so-called "best time to buy" for the foreseeable future. The best time in the current market is when you find a dealer that has the vehicle you want and is willing to sell it to you at MSRP or better, without any additional options that you may not need.

Buying a new car is a big step, but it doesn't have to be a daunting one. Here's how to research, locate, price and negotiate to buy your new car. Smartphones make these steps easier than ever. It is now entirely possible for a buyer to shop for a vehicle while in line at the supermarket or waiting to pick up the kids.

Automaker sites are useful for seeing more photos and learning more about features and options on vehicles. Use these tools and you should have little problem selecting the right car or SUV. Once you have a short list, it's time to figure out how you'll pay for the car.

If you follow the steps below with Edmunds, a salesperson from the dealership will contact you to schedule a test drive. If you found the vehicle on another site, call the dealership's internet sales department to request more information. In either case, keep these do's and don'ts in mind:

  • Do verify that the car you want is still in stock. It might have been sold recently, and online inventories can take a while to catch up.

  • Do ask the salesperson if there are any dealer-installed options. Many new vehicles are sold with add-ons such as nitrogen in the tires, all-weather floor mats or theft protection packages. Also, ask if there are any "markups" or "market adjustments" on the car. Both the markups and dealer-installed options can easily add thousands to the selling price.

  • Don't just show up at the dealer on a busy weekend or late at night. Waits may be long, and you may not get the salesperson's full attention.

  • Do schedule an appointment for a test drive. Early in the week and mornings are good times. Having an appointment means the car will be waiting for you when you arrive. You can also ask for the vehicle to be brought to your home for the test drive.

  • Don't just drive around the block. Take the time to see how you and your family fit in the car and how it handles on a variety of roads.

  • Do ask yourself the following questions: Are the controls easy to use? Is there enough cargo space? Will a child seat fit? (Bring it with you and test it.)

  • Don't feel obligated to buy the car the same day. Feel free to take a night to think it over.

Even with so much automotive information available on the internet, many people still want to purchase new cars within only a few days of deciding to buy. This means a shopper could buy the wrong vehicle or one with too few or more features than needed rather than making an informed purchase decision.

Another tool that will help you narrow your search is the Side-By-Side Comparison, which allows you to compare specifications and see which features are standard or optional on each new car. This is a beneficial exercise when you are down to just a few vehicles and want to compare finer points or features.

When considering a new vehicle purchase, the lines of affordability can quickly become blurred due to the varied financing options available. Wise buyers shop for a new vehicle based on what they can afford. Keep an open mind, and you could be pleasantly surprised by the list of cars within your price range.

Many personal finance experts recommend keeping your car budget costs to no more than 10% of your take-home pay after taxes. Your budget will include any car payment, auto insurance, gas, maintenance, and repairs. Use our tool to see what it will cost over five years for the vehicle make and model you prefer. This tool provides estimates for gas, insurance, repairs, and more. It can help you determine your overall budget.

Far too many car buyers shop for vehicles beyond their means and prefer a low down payment. It can lead buyers to drastically misjudge their capabilities regarding monthly payments and then want to reduce the monthly payments by stretching out the lengths of the loans, all of which lead to trouble in the future.

Get the Kelley Blue Book Trade-in Value of your current vehicle. Based on the condition of your car, the value represents an accurate range of what you can expect when trading in your car at a dealership. If you decide to trade your vehicle, keep in mind, the dealer must assume the responsibility for preparing your trade-in for resale. This process usually includes mechanical and smog inspections and repairs to make the car ready to sell to the next owner. This will cost the dealer money, and the dealer will figure this into the deal.

If you prefer to sell your vehicle to a private party, check out the Blue Book Private Party value first. This is the value you can expect to get when selling the car to another consumer. In this case, you are solely responsible for preparing your vehicle for sale and setting and negotiating a fair price. Read more on trading in or selling yourself in Step 8.

Also, check for any available customer or dealer incentives on your new vehicle, adding to your available cash amount. Remember, you still need to add taxes, tag costs, and fees, which can vary by state. You can obtain this information through your local DMV.

An online analysis of how your favorite vehicles rate in quality can be a true eye-opener. Years ago, quality referred only to the absence of defects in a car. But research organizations like J.D. Power and Associates have expanded their research analysis to cover positive aspects of new cars.

Check out owner opinions. Those can be a valuable resource to discover how current drivers rate their new cars. After purchasing your vehicle, you can submit a review to help others make informed decisions.

So who pays the MSRP? Lately, the lack of vehicle inventory due to the microchip shortage means demand is higher than supply. For instance, during their respective launches at the time, the Mazda Miata, Volkswagen Beetle, Chrysler PT Cruiser, and Honda Odyssey demanded prices well above MSRP.

The most efficient way to discover how optional equipment will affect the bottom line is to build a car online. This handy tool will automatically add the cost of each option available on your vehicle and give you a new total reflecting the additional cost factors.

Leasing restrictions include mileage limits of typically 12,000 miles per year, or sometimes 10,000 miles per year, diligent upkeep and care of the vehicle, and, in some cases, penalties for early termination.

After a lease deal is offered to you, be sure to pay close attention to the negotiated purchase price of the vehicle. In addition, look for any fees outside the lease rate, and never sign a lease contract unless the residual value or optional purchase price at the end of the lease is clearly shown.

Remember to check for incentives on your vehicle of choice. From 0% financing to customer-cash rebates, manufacturers constantly compete for your business by making their vehicles and financing more affordable.

An extended warranty from an independent company could cost less than an extended service contract from a manufacturer. But the quality of this kind of contract varies widely from company to company. Shop carefully and only consider if you plan to keep your vehicle past its existing warranties.

The type of vehicle you choose and the history of your driving record can profoundly affect the cost of insurance. Typically, sports cars, high-performance cars, turbocharged or supercharged vehicles, those with larger engines, and vehicles with 4-wheel drive often result in higher insurance rates. Also, vehicles with histories of being stolen can demand a premium.

Like most do-it-yourself projects, selling your own vehicle to a private party can be cost-effective. In contrast, trading in your current vehicle at the dealership makes it easier and sometimes faster. 041b061a72

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