What to know when buying a car
Buying a new or used car can be an exciting time, but there are also several key steps to take to help ensure that you get the best vehicle for your needs. To get the best deal on your vehicle and know which add-ons are right for you, the following tips may be helpful.
What you should know when buying a car
The more information you gather and prepare ahead of car shopping, the better your experience will likely be. How do you get prepared? It helps to begin by asking yourself what you need to purchase a car. From there, you can think though the following considerations:
Know your options
There are multiple websites that allow you to research and compare cars, from Edmunds.com to Kelley Blue Book. The best sites are generally 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 and price point you are most interested in.
You may want to take time to make sure you choose the best vehicle for you and anyone else who may be using the car. Conducting your search online before heading to the dealership can help you nail down the features that are important to you.
Know whether to lease or own
While you are deciding on your car, you may want to consider the pros and cons of leasing or owning a 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 for as long as possible, purchasing a car outright may make more sense for you, since you’ll likely have several years after you pay off the loan to save for your next car.
Know your financing options
If you can afford to buy your car with cash, that may be the best option. Purchasing your car outright will prevent you from having to pay interest on a car loan. However, you might want to consider settling on a deal prior to mentioning that you plan to purchase the vehicle outright. A dealer makes money when they can finance your purchase and may be more inclined to make a deal if they think you will finance through the dealership.
If you are planning to finance your purchase, you may not want to wait until the day of sale to secure your loan. Shopping around for auto loans with a local bank or credit union may help you find the best rate. If you bring proof to the dealership that you’re pre-approved for another loan, you may be able to get financing through the dealership with a lower APR than the bank’s rate.
Know the total cost of your vehicle
Keep in mind that the total cost of your vehicle goes beyond its sticker price or purchase price. You may want to factor in interest, insurance costs and maintenance costs. If you go the financing route, whether you finance through a bank or go with the dealer’s financing options, be sure to understand what each is offering. Rather than only looking at the monthly payment for your vehicle, you may want to look at the total cost of financing, including interest. Extra costs, such as any add-ons the car salesman may convince you to purchase at $10 or so tacked on to your monthly payment, can quickly add up.
Additionally, your salesman may discuss options to increase the length of your lease to lower your monthly payment. While your monthly payment may go down, you’ll likely spend much longer paying off the loan. For these reasons, you may be better served looking at your costs in terms of the total loan, rather than the monthly payment.
Know your insurance costs
Along with factors such as your geographic location and driving history, your vehicle’s make and model will affect your insurance costs. If you know what vehicle you’re going to purchase ahead of time, you may want to call your insurance agent and discuss your coverage and premium with them. If the car you are purchasing is equipped with certain safety features such as an anti-theft system and anti-lock brakes, you may be able to get a discount. If your car has cheaper parts, your car insurance may decrease. Typically, American-made vehicles have cheaper parts than foreign vehicles.
What to do after buying a car
Your new car journey isn’t over as soon as you make the vehicle purchase. The following steps may help you get the most out of your experience with car insurance and vehicle maintenance.
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, you want to make sure your insurance policy is active. Getting caught driving without insurance can lead to consequences if you have an accident or are stopped by the police.
Consider collision coverage and comprehensive coverage
With the purchase of a newer vehicle, you may want to reconsider adding both collision and comprehensive coverage. If you’re financing or leasing your current vehicle, you may be required to add collision or comprehensive insurance to your policy in order to protect the loan. You can talk to your insurance agent about whether full coverage is a good idea or required for you.
Consider roadside assistance coverage
Several insurance providers offer roadside assistance as an add-on to your insurance policy. This service helps provide you peace of mind by knowing that help is a phone call away if you get a flat tire or your battery dies.
Read your vehicle’s manual
Reading an owner’s manual may not be the most exciting part of your car buying experience, but it makes sense to familiarize yourself with your new car’s features. Even if you purchased a newer model of a car you have previously owned, features change and you’ll want to ensure you know how to operate each part of your vehicle, especially in the case of hazardous driving conditions.
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 seller, it might be beneficial 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 car insurance company?
The best car insurance company will depend on your personal characteristics, preferences and policy needs. You may want to start by consulting a car insurance agent who can help you nail down your policy needs. Then, you may want to compare car insurance quotes from the best car insurance companies in your area.
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. You may want to 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 think critically through any extras a dealer suggests adding to your loan.
How much car insurance do I need?
Every state except New Hampshire and Virginia has minimum car insurance requirements, which means you’ll have to purchase at least the minimum required limits in your state. However, most insurance experts recommend purchasing full coverage insurance instead. If you only purchase the minimum liability requirements, you could be left financially vulnerable in the event of an accident. Full coverage assists with paying for damage to your vehicle, which means you’ll be less likely to pay out-of-pocket following an accident.