Is it time for a new set of wheels, but you don’t know where to start? The process from dreaming about a new car to it actually sitting in your driveway can be overwhelming, but there are few simple steps you can take to make the process as painless as possible.
1. Figure out what you can afford:
That shiny new mustang might look nice cruising down the interstate, but not if you have to eat peanut butter sandwiches on stale bread all month to drive it. Budgets are important for a million reasons, but calculating what your budget can realistically support is the first step in successful car buying. Only you know what you can afford and if you will be financing it or paying cash. It’s easy to get swept up in the excitement of a new car, so keeping this number in mind throughout the process is probably the most important thing you can do for yourself.
2. Know your credit score:
No news is not good news where credit scores and car loans are concerned. The way to make sure you are getting the best terms with your future loan is to know your credit score and what range of interest rates to expect. The three major credit bureaus all offer one free credit pull a year and it does not impact your credit score at all.
3. Shop Around and Get Pre-approved For a Loan:
Now that you know what you can afford and what interest rate range your credit score allows, you can start shopping around for a car loan. Even if your credit score is not stellar, you are limited to the first loan that you are offered. You will need to provide your social security number, date of birth, and proof of identity to the lenders so they can check your credit. Pulls on your credit from lenders are considered “hard pulls” and do drop your credit score by 5-10 points, but all pulls in 14 days count as one so it is ok to shop around. Once you find the lender with the most agreeable terms, you will want to secure a pre-approval letter that you can take with you to the dealership.
4. Visit Several Dealerships and Test Drive:
Just like how you don’t want to take the first loan offer that comes your way, you don’t want to buy the first car you see. Before you head to the dealerships, have a couple of cars and a couple of dealerships in mind. The internet is your friend and don’t be afraid to tell the dealership that you are test driving several types of cars and several different places. They will be more likely to try to earn your business with discounts. Also, what you thought you would live, you might find drives like a golf cart. Keep your options open and ask to drive anything you think you might like!
5. Expect to Negotiate the Price:
Buying a car is an investment and you have the right to the best price you can get. Car dealerships both new and used have wiggle room in their prices and they will negotiate with you on the price of your car. If you expect to negotiate, and maybe even practice, you will be better prepared to enter into negotiations for your best deal. Remember that you can always walk away at any point until the keys are in your hand. They’re not doing you a favor selling you a car.