The auto industry is changing fast. In the last decade, manufacturers have introduced a plethora of upgrades and improvements in safety, luxury, and technology. For those who have never purchased a vehicle, the process can be dizzying, if not downright intimidating. Acquiring your first automobile means doing a serious amount of research and following a few commonsense guidelines about how to get the right model at the best price.
The good news for first-timers is that there are all sorts of ways to navigate the minefield of a purchase. Hybrid-electric and all-electric models are showing up in dealerships and rapidly transforming the way consumers look at personal transportation. Plus, the used-car market is hotter than it’s ever been, particularly as people seek ways to offset the effects of long-term inflation and a flagging economy.
What can conscientious buyers do to get the car or truck they need and want? Besides avoiding the costly new models, establish good credit as early in life as possible, do lots of research, use a vehicle broker’s services, save for a down payment, shop around for the best loan terms, and always do an extensive test drive before committing to a deal. Here are the relevant details.
Avoid Purchasing New Models
Despite all the reasons to buy a new car, you might want to reconsider. Depreciation can wipe out about 10% of a car’s listed sticker value once you drive it off the lot. A far better alternative to buying new is to shop for one and two-year-old models that have low mileage. Most dealers are swamped with them from trade-ins, and they work hard to get the used models out of inventory. Watch for seasonal “inventory sales,” where almost new vehicles are substantially marked down for fast sales.
Establish Credit Early
Unless you plan to pay cash for an automobile, it’s essential to have decent credit to get the model you want. Avoid dealing with merchants who offer to finance the purchase “in-house” for high rates of interest. The far better approach is to establish a good credit score as soon as possible. Having a financial record of on-time payments is a quick way to get on the radar of credit reporting bureaus. When you do that, purchasing big-ticket items with credit is much easier.
The most advantageous time to acquire a first credit card is while you’re still in college. Begin by reviewing a helpful guide for students that explains how to find a card that suits your specific situation. For young adults who manage their money and know what it means to live on a budget, there’s no better way to become financially responsible.
Do Your Homework
The automobile industry is changing rapidly. Nowadays, there are more choices than ever before, which means it’s critical for prospective buyers to do their due diligence. Spend time online researching the makes and models that interest you. Read reviews. Compare prices and features. After making a shortlist, dig in deeper and study the pros and cons of each choice.
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Explore financial websites that offer financing scenarios about down payments, interest rates, payoff times, and other relevant details. Research is an indispensable part of car buying. Never assume you know all the facts, whether your goal is to get a new or used model. Remember that evaluating used autos is more complex because previously owned cars and trucks have more variables, like mileage and how well the original owners maintained the vehicle.
Use a Broker
In an era when consumers can buy almost anything online, autos are no exception. The most advantageous way to become an owner is to use the services of a broker. Most charge about $500 for full service. That includes finding the precise car or truck you want, negotiating with a dealership for the lowest price, and having it delivered to your location. In some cases, brokers work with specific groups of dealerships, which means making at least one trip to the dealer’s lot to pick up your automobile.
Whether you are shopping for used or new vehicles, don’t settle for a brief test drive around the block. Particularly if you’re in the used market, spend at least 30 minutes driving and check out all major systems. Consider printing out an online checklist of what to do during a long test. Some buyers prefer to take used models to a trusted mechanic for a full rundown. The cost is modest, considering how valuable the information can be. For consumers who want maximum peace of mind, it’s wise to do a 30-minute test drive and have a mechanic inspect the automobile.
Be Smart About the Down Payment
Down payments can make a major difference in the total amount paid on a loan. Spend at least six months saving, and shop around for lenders who are willing to give better terms and possibly lower interest rates for buyers who pay 10% or more down at the time of sale.