Are you entering the car market for the first time in years – perhaps decades? The game has changed from back in the day – but you can still get a great deal on your next car by following a few simple tips. Here’s our tips for buying your next car without getting burned.
Do you buy new or used?
The easy way to figure out if you want to buy new vs used is this – new cars have higher upfront prices but will cost you less; used cars have lower upfront prices but will cost you more. New cars are easier to finance, are generally safer and more reliable, have greater residual value, and will last longer than your used car. A used car may be cheaper to buy; but you will get less use out of it, pay more in maintenance and fuel (usually), are generally less reliable, and finance may be harder to come by – or more expensive per dollar spent.
Set your budget
You must decide on a budget and have a clear notion of the sort of vehicle you’re after—or one that you want—that fits within your means. List your top priorities, including things like towing capability, safety features, fuel efficiency, and storage capacity. You may now narrow down your selection of vehicles and determine how much you’ll need to borrow.
Check your credit
If you suspect you have bad credit, you may want to check your credit history. You can do this for free once every three months at a credit reporting agency. If your credit is bad – go through your history thoroughly and correct any mistakes. But don’t fret; you can get a car loan even if you have bad credit.
Get pre-approval
The next step to gain as much value as you can is to get car loan pre-approval. This means getting your loan sorted in advance instead of when you’ve purchased the car. This helps you with leveraging a good deal, as your lender will give you a maximum pre-approval limit. If you see a car just outside your price range, a dealer will have to meet you at your limit – or you’ll have to turn them down. Remember: dealers always want to make a sale despite their songs and dances!
If you need to get help finding a car loan, your best bet is to approach a specialist car loan broker. Brokers can connect you with many lenders and find a solution that’s right for your situation.
Approach dealerships at the right time
Now that you have pre-approval, you should approach dealers either at the End of Financial Year or at the End of the Year. Cars already on the showroom floor are costing dealers money; they want to move it so they can bring in newer models. If you can’t wait that long, try waiting for the end of the month – salespeople have quotas to fill. If they want their bonus, they need to get selling!
Beware of private sales scammers
If you do end up going the private sales route, beware of scams. Don’t send ANY money upfront as a “deposit” or “finder’s fee” or “delivery fee.” Unless you can inspect the car in person and test drive it in a well-populated area (bring a friend if you’re unsure), walk away. Anything else are tell-tale signs of scams.
To be sure, always buy from a dealer as you get consumer protection; even if you do end up paying a little more for the peace of mind.
