Knowing when to shop for a new car is important (usually end of the month, and end of the year) but that’s not all you need to know. Before driving off with one of the biggest investments you’ll ever make (besides a house) think about these things that you need to do to get your things in order.
1- Don’t buy a car without first figuring out exactly what you’ll be spending on it for the entire time you own it. If you’re taking out a loan to buy it then you’ll have to make those monthly payments, but that’s not all you need to worry about. Don’t forget about the cost of maintenance. That car may be brand new, but it’s still going to need checkups and an oil change every now and then. Eventually as it gets older your maintenance costs will likely go up.
Then you need to factor in the cost of insurance. Having insurance is the law (it’s also wise) so you need to shop around and see what that will cost you. Be sure to calculate the cost of gas for your new car. If it’s a gas guzzler then you’re going to have to factor in that extra gas money. However, if you’re getting something that’s more fuel efficient then you could be saving some money compared to your previous vehicle. Lastly, don’t forget your taxes and registration fees for your state. Add all this up and see what you can afford before you go out shopping.
2- Once you have all this info about cost you can add that to the cost of the car and that should give you a good idea of what type of car you can afford. This will help you make a decision and what amount of money for a loan you can go after comfortably. You don’t want to put yourself in a tough spot each month just to make your car payment. In my opinion, if you haven’t saved enough money in your bank accounts to pay for the car outright then you can’t afford it. You need to buy a lesser car. You should have at least that much money saved up in your retirement and emergency fund. You don’t? Then buy a less expensive car.
3- If you’ve been good about your money and paying attention then you should have a good credit score. Your credit score can save you lots of money by getting you a better rate on your car loan. So it’s important to make sure your credit is good before you go out searching. Fixing credit takes time, so if you find problems with your credit score you need to deal with them sooner rather than later. Check your credit report diligently and you shouldn’t have any problems.
4- Don’t just walk into the dealership and buy a car. You need to really do your research and figure out what’s best for you. I’ve written a lengthy post about how you can go about getting a good deal on a car. I would suggest you start there. The first time you head to the dealership should be just to test drive to see if you like the car. Once you’re ready to make the purchase you should do your negotiating using the internet. Why? Because it’s the fastest way to get quotes from multiple dealers on the same vehicle.
Don’t forget to shop around for your financing too if that’s what you plan to do. It would be wise to have your financing in order before you start dealing for the car. This way you know exactly what you can afford and what it will cost you. Then when you finally make a deal on a car you can compare the financing at the dealership with what you have already secured elsewhere. You’ve already shopped around for the best loan deal so you’re not forced to take the sub par terms from the dealership.