Steps for getting the best deal
What steps can a car buyer take to be sure they are getting the best deal for their money?
Cory’s response:
The best way to get the most for your money is to simply do your homework. Know what you want, what your budget is, what you are willing to pay and what you are looking for is worth. If you do your pre-work, shopping will be easy and you will be able to feel good about what you have done. Here are the steps you should take when you are ready to buy a car:
1. Figure out your budget.
a) How much you have available to put down on a vehicle. Unless you have strong credit the banks will give you a better interest rate if you are putting 20% to 30% down and covering tax, tags and fees. Either way, figure how much you are able to put down without draining your bank account. You do not want to have a cash emergency and not have money available.
b) Decide what you can afford a month. If you have standard credit plan on every thousand dollars you borrow to be about twenty dollars in payment. (i.e. $10,000 borrowed for 60 months will yield a payment of around $200 per month) Do not forget about insurance, if you are financing you will need full coverage insurance, usually with $500 deductibles. If you are not sure of your credit situation you can always buy your credit report; 720+ score and you can expect the best rates; 680 to 719 you will still be easy for a bank to approve and you will still get a very competitive rate; 620 to 679 you should be approved at an average to slightly below average rate; 580 to 619 may require some more money down and a little bit of work on the dealership to get you approved. You will pay a higher interest rate, but you still should have a chance to be approved. Below 579 and you will require some help and special attention to get a loan. Once you know about where your credit situation is and what you can expect as an interest rate you can go on line and find a loan calculator and really hone in on what you can expect for the amount you can afford per month.
c) Now that you know what you are putting down and what you are able to afford for a monthly payment, you will be able to calculate what the price of your new vehicle will be. What you need to do is add your down payment to what your monthly payment yields you, subtract $200 in document and tag fees, then multiply it by 94% to account for tax. This will give you your budget for a vehicle. (Example: $2,000 down payment + $200 monthly payment over 60 months yields ($10,000)= $12,000 - $200 fees = $11,800 X .94 (94%)= $11092, so you should be looking for a vehicle in the $11,000 range)
2. Figure out your vehicle (create the shopping list)
a.) Now that you know what you have to spend, you will want to figure out what you would want in your price range. There are several good sources for this; go on either cars.com or autotrader.com or any auto sales web site, type in your price parameters and scan through what comes up. Another good source is Consumer Reports used car guide. In this guide, you will find lists of Consumer Reports recommended vehicles broken into price ranges as well as vehicles they feel you should avoid. In this step, I recommend that you look at every vehicle available to you so that you can get a full picture of what you might be able to buy.
b.) Once you have a picture of what types of vehicles are available to you in your price range, decide which would be best for your needs. I would pick five types that are acceptable and rank them 1 through 5 on what you like best.
3. Time to shop
a.) The best start for your shopping trip is a virtual one. Go on line to the same sites I told you about above and a half dozen others and gather your list of vehicles that suit your price, needs and wants list. Simply print out the information sheets on the vehicles and pile them up.
b.) Now that you have a list of vehicles that might fit your needs in physical existence, sort them in order of your top choice on down. Start calling the dealerships to make sure the vehicle is available and book an appointment to see the vehicle and the dealership.
c.) Remember, if this is a used car you must be prepared to buy when you find what you want. You need to remember that no two used cars are alike and the used car you are thinking about today may be the same used car that someone else looked at yesterday. Plus if you are in a position to buy that day and the dealership knows it, you will be in a position of greater power because they will work harder to make sure you leave with their car.
d.) You pick the best vehicle for you to look at first because you do not need to waste your time looking at vehicles if you find the best one for you right off the bat.
e.) If you like how the vehicle drives and looks then it is time to work on buying it. You need to negotiate your price, but make it pending your mechanic checking things out.
4. Buying your vehicle
a.) You have driven the vehicle, visually inspected it, checked out the dealership and the salesperson you are buying from. Now you need to ask yourself some questions. Do I like the vehicle? Does it look and feel right? Do I like the person I am dealing with, or at the very least do I not dislike them? Does the dealership make me feel comfortable? If I had a problem with the vehicle does it feel like the dealership would work with me? If the answer to any of these questions is “no” then you should probably move on to the next car on your list. If you can answer these questions “yes”, then it is time to negotiate.
b.) When you are negotiating you will want to have all your research available to you. Give the dealership all your initial information so they can get the process started and then, before the salesperson goes to talk to the sales manager, let them know two things. First, if they make you happy you will buy their vehicle today and second, what you are willing to pay for the vehicle. You want to do this because the dealership will work extra hard for your business if they know that you are prepared to buy if the circumstances are right. You want to start with your numbers because then the dealership will need to work up from your number rather than down from their number. Usually whoever starts the negotiation will start at the extreme end of the scale, so you want to start out at your end, not theirs. Keep in mind what market value is for the vehicle and what your budget is and let that be your guide to when to say yes. Many times a dealer will try to move the discussion to payment and down payment. Let them know that you have already worked that out and the price of the vehicle is all that matters to you and the value of your trade if you have one.
c.) Finally after they have agreed to your terms and you to theirs, it is time to do the paperwork. As stated before, if you are buying a used car, I would buy the vehicle with the condition of having your mechanic check the vehicle first. Put a deposit down on the vehicle and arrange to have your mechanic take a look at it. The $50 - $75 you spend for them to look it over could save you a future headache. Keep in mind that all pre-owned vehicles are not perfect and your mechanic may tell you every little detail. You may not need to sweat the small stuff, but at this point it is your choice.
5. In conclusion, the simple rule for making buying a vehicle less stressful and making sure you get the best deal for you is to do your homework. Good luck and good shopping.
Cory’s response:
The best way to get the most for your money is to simply do your homework. Know what you want, what your budget is, what you are willing to pay and what you are looking for is worth. If you do your pre-work, shopping will be easy and you will be able to feel good about what you have done. Here are the steps you should take when you are ready to buy a car:
1. Figure out your budget.
a) How much you have available to put down on a vehicle. Unless you have strong credit the banks will give you a better interest rate if you are putting 20% to 30% down and covering tax, tags and fees. Either way, figure how much you are able to put down without draining your bank account. You do not want to have a cash emergency and not have money available.
b) Decide what you can afford a month. If you have standard credit plan on every thousand dollars you borrow to be about twenty dollars in payment. (i.e. $10,000 borrowed for 60 months will yield a payment of around $200 per month) Do not forget about insurance, if you are financing you will need full coverage insurance, usually with $500 deductibles. If you are not sure of your credit situation you can always buy your credit report; 720+ score and you can expect the best rates; 680 to 719 you will still be easy for a bank to approve and you will still get a very competitive rate; 620 to 679 you should be approved at an average to slightly below average rate; 580 to 619 may require some more money down and a little bit of work on the dealership to get you approved. You will pay a higher interest rate, but you still should have a chance to be approved. Below 579 and you will require some help and special attention to get a loan. Once you know about where your credit situation is and what you can expect as an interest rate you can go on line and find a loan calculator and really hone in on what you can expect for the amount you can afford per month.
c) Now that you know what you are putting down and what you are able to afford for a monthly payment, you will be able to calculate what the price of your new vehicle will be. What you need to do is add your down payment to what your monthly payment yields you, subtract $200 in document and tag fees, then multiply it by 94% to account for tax. This will give you your budget for a vehicle. (Example: $2,000 down payment + $200 monthly payment over 60 months yields ($10,000)= $12,000 - $200 fees = $11,800 X .94 (94%)= $11092, so you should be looking for a vehicle in the $11,000 range)
2. Figure out your vehicle (create the shopping list)
a.) Now that you know what you have to spend, you will want to figure out what you would want in your price range. There are several good sources for this; go on either cars.com or autotrader.com or any auto sales web site, type in your price parameters and scan through what comes up. Another good source is Consumer Reports used car guide. In this guide, you will find lists of Consumer Reports recommended vehicles broken into price ranges as well as vehicles they feel you should avoid. In this step, I recommend that you look at every vehicle available to you so that you can get a full picture of what you might be able to buy.
b.) Once you have a picture of what types of vehicles are available to you in your price range, decide which would be best for your needs. I would pick five types that are acceptable and rank them 1 through 5 on what you like best.
3. Time to shop
a.) The best start for your shopping trip is a virtual one. Go on line to the same sites I told you about above and a half dozen others and gather your list of vehicles that suit your price, needs and wants list. Simply print out the information sheets on the vehicles and pile them up.
b.) Now that you have a list of vehicles that might fit your needs in physical existence, sort them in order of your top choice on down. Start calling the dealerships to make sure the vehicle is available and book an appointment to see the vehicle and the dealership.
c.) Remember, if this is a used car you must be prepared to buy when you find what you want. You need to remember that no two used cars are alike and the used car you are thinking about today may be the same used car that someone else looked at yesterday. Plus if you are in a position to buy that day and the dealership knows it, you will be in a position of greater power because they will work harder to make sure you leave with their car.
d.) You pick the best vehicle for you to look at first because you do not need to waste your time looking at vehicles if you find the best one for you right off the bat.
e.) If you like how the vehicle drives and looks then it is time to work on buying it. You need to negotiate your price, but make it pending your mechanic checking things out.
4. Buying your vehicle
a.) You have driven the vehicle, visually inspected it, checked out the dealership and the salesperson you are buying from. Now you need to ask yourself some questions. Do I like the vehicle? Does it look and feel right? Do I like the person I am dealing with, or at the very least do I not dislike them? Does the dealership make me feel comfortable? If I had a problem with the vehicle does it feel like the dealership would work with me? If the answer to any of these questions is “no” then you should probably move on to the next car on your list. If you can answer these questions “yes”, then it is time to negotiate.
b.) When you are negotiating you will want to have all your research available to you. Give the dealership all your initial information so they can get the process started and then, before the salesperson goes to talk to the sales manager, let them know two things. First, if they make you happy you will buy their vehicle today and second, what you are willing to pay for the vehicle. You want to do this because the dealership will work extra hard for your business if they know that you are prepared to buy if the circumstances are right. You want to start with your numbers because then the dealership will need to work up from your number rather than down from their number. Usually whoever starts the negotiation will start at the extreme end of the scale, so you want to start out at your end, not theirs. Keep in mind what market value is for the vehicle and what your budget is and let that be your guide to when to say yes. Many times a dealer will try to move the discussion to payment and down payment. Let them know that you have already worked that out and the price of the vehicle is all that matters to you and the value of your trade if you have one.
c.) Finally after they have agreed to your terms and you to theirs, it is time to do the paperwork. As stated before, if you are buying a used car, I would buy the vehicle with the condition of having your mechanic check the vehicle first. Put a deposit down on the vehicle and arrange to have your mechanic take a look at it. The $50 - $75 you spend for them to look it over could save you a future headache. Keep in mind that all pre-owned vehicles are not perfect and your mechanic may tell you every little detail. You may not need to sweat the small stuff, but at this point it is your choice.
5. In conclusion, the simple rule for making buying a vehicle less stressful and making sure you get the best deal for you is to do your homework. Good luck and good shopping.
posted by Cory Fosbenner at
1:56 PM
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