Buying a car, whether new or used, can be an exciting time. There are many options to choose from and enticing extras to consider. Dealers know this, and will do their best to capitalize on your interest to make the best deal — for the dealership.
You, of course, want the best deal for yourself. That takes a little extra work, but in the end, it will enable you to purchase a solid vehicle that works for your needs at a reasonable cost. Read on for some ideas that will make your car shopping experience worthwhile and effective.
What you should know when buying a car
It has been said that knowledge is power, and that’s definitely true of car shopping. The more prepared you are beforehand, the better your experience will be. How do you get prepared? Here are a few tasks that answer the question: what do you need to buy a car?
Research your options
There is no lack of websites that allow you to research and compare cars, from Edmunds.com to the Kelley Blue Book. The best of these are independent and not affiliated with a particular manufacturer or financial institution. They offer you the ability to compare multiple cars to find the one that has the features you are most interested in.
It is worth taking the time to explore the possibilities, along with your partner or anyone else who may be using the car. Narrow your search down online before you even reach the dealership, and think about the features that matter to you.
Lease or own?
While you are deciding on your car, consider whether you want to lease or own your vehicle. If you like to trade your car in for a new one every two or three years, a lease might make sense. If, on the other hand, you prefer to drive your car into the ground, purchasing a car outright may make better sense, since you should have years after you pay off the loan to save for your next car.
Determine your financing options
If you can afford to buy your car with cash, great. One suggestion: don’t let your dealer know until you have squared away your deal. Your dealer makes money on financing your purchase, and may be more inclined to make a deal if they think you will finance through the dealership.
And if you are planning to finance your purchase, don’t wait to do it the day of the sale. Shop around to see the going rates for car loans with your local banks. Have your financing pre-approved before you go to the dealership, so that you can avoid being distracted by financing “deals” that may not be to your benefit.
Know what you are comparing
Whether you get your financing from a bank or go with the dealer’s financing options, be sure to understand what each is offering. It is not a good idea to look only at the monthly payment — that can be deceptive, because it doesn’t tell you the loan’s total. You may also be talked into getting extras you don’t need, because it adds “only” eight or nine dollars to your monthly payment.
Instead, find out the monthly payment, multiply it by the number of months of the loan, then add your down payment and any fees or taxes. This number will tell you what your total payment will be for your purchase.
Consider insurance costs
If you have done your homework, you know ahead of time the car you are interested in purchasing. Be sure you understand all the costs involved, however, by making a call to your car insurance agent. Discuss coverage options with them and get a quote.
If the quote is too high, consider exploring other insurance companies. Online quotes are easy and take only a few minutes of your time. If you are still deciding between more than one vehicle option, the cost to insure each one may help you make the most financially attractive decision.
What to do after buying a car
Once you have made your choice, you might think you are finished — but there are still things you can do after the sale to ensure that you have made the best decision possible.
Finalize your insurance
Once you have signed on the dotted line, whether you’ve purchased via a dealer or a private transaction, you need to call your insurance company and add the new car to your policy. Either way, before you drive away, make sure your insurance policy is active — getting caught without insurance can be disastrous if you have an accident or are stopped by the police.
Consider collision and comprehensive
If you were previously driving an older car, you may not have included collision and comprehensive coverage in your policy. For older cars that may not be worth repairing if they are damaged in an accident, you may not want to pay for the extra coverage.
But now you have a new car — or newer, if you purchase a used vehicle — and it may be worth adding this coverage to your policy. It’s worth noting that if your vehicle is financed then you may be required to add collision or comprehensive insurance to your policy. Your best bet is to talk to your insurance agent about whether collision and comprehensive is a good idea or required for you.
Roadside assistance coverage
Most people are familiar with AAA’s roadside service. For an annual fee, you can have the satisfaction of knowing that if you get a flat tire or your battery dies, help is a phone call away. But did you know that many insurance companies offer roadside assistance as an adjunct to your policy coverage? Depending on your insurance company, this may be an attractive option, cost-wise, and is worth looking into.
Read your manual
Reading an owner’s manual may not be your idea of a good time, but it makes sense to at least familiarize yourself with your new car’s features. Even if you purchased a newer model of a car you have owned in the past, features change, and you do not want to be out on the road in a rainstorm when you realize you don’t know how to operate the wipers.
Think about maintenance
If you bought your car from a dealer, whether new or used, your car should be up to date on its oil changes and other regular maintenance. If you purchased it from a private individual, however, you would do well to take the car to your regular mechanic as soon as possible after the sale (if you did not do so before the sale) to change the oil, check the tires and brake pads and give you a clean start on life with your vehicle.
Frequently asked questions
What is the best auto insurance company?
The best auto insurance company is the one that gives you good coverage options at competitive rates with stellar customer service. A good place to start your search for the best car insurance for your circumstances is with our Best Auto Insurance Companies of 2020 listing.
Which is better: dealer financing or a bank loan?
That depends on a number of factors, but it comes down to determining which option costs you less. We suggest that you get pre-approved for a car loan at your local bank, and then see what the dealer can offer you. Always bring a calculator with you to the dealership so you can add up the total loan amount, and don’t be distracted by dealer offers to add in “extras” to your loan.
How much car insurance do I need?
Every state has minimum requirements for liability, but if you can afford it, consider purchasing additional coverage. In a serious accident that involves medical costs, it is possible to have bills running into the six figures. The higher your liability limits, the better equipped you will be to cover costs in the event of a catastrophic accident.