My first car was a 1986 Honda Prelude. I bought it in 1996, the year I graduated from college.
Riding in my car was like riding around in a metal wedge of cheese. The brakes didn’t work, the heat didn’t work, the air-conditioner didn’t work, the defroster didn’t work, and the sunroof leaked rusty water every time I came to a stop. I lived in the city, so stop-and-go was how I drove, and when it was go, it was all go.
I want to say it was a good car, but it wasn’t.
I wrapped the navy blue wedge of cheese around a tree early one morning on my way to work.
It was black outside and icy. The defroster wouldn’t even work and I couldn’t see. I fussed with the heat as I careened around a corner and right into a tree. There were no air-bags in those days, so it was head to metal. Lots of fun.
Through the years, I’ve had my share of less than adequate vehicles. Some have been miracles sent straight from heaven and others, well, they acted like they came from hell. The good news is I have learned my share of lessons from my cars.
Buying a new car is huge decision, one that needs thought and planning before you ever step foot on a lot. If you don’t plan ahead of time, you will most certainly spend too much money and say yes to things you don’t even want or need. Let’s be prepared ahead of time.
3 Negotiations in Buying A New Car
There are three basic negotiations in buying a new car. The more prepared you are before you shop, the better car you’ll get for your money.
1. Trade-In Value
Your first negotiation is trade-in value. Before you ever step foot on a car lot, know what your trade-in is worth. Set a price you are comfortable taking for your current vehicle. If you get more than that price, great, but know your bottom line.
Get the Kelly Blue Book App for your mobile device. It’s free!
2. Purchase Price
Do your homework before you go shopping. Narrow down your selection to three cars and test drive them.
Never give out your social security number before you’re ready to buy the car. They will run your credit report while you are out test-driving the car. Although they will tell you it doesn’t matter, it does. Protect your credit rating!
Shop online before you talk to salesmen. Get dealership recommendations from trusted friends. Go someplace that has a reputation for being fair and honest. Always remember it’s ok to say No. Walk away from a deal if you must, but don’t regret your purchase.
And, say no to the add-ons. It will drive up your purchase price and most of the time, you do not need or want the add-ons.
3. Rate: Terms of the Loan
Above all, know how much you can afford to pay. Work and rework your budget. Don’t fall for something new and shiny if you cannot afford it. Living within your means is a wonderful discipline that will serve you well. There is freedom in knowing your financial limitations and deciding to live within your budget.
If you can, get your financing before you go car shopping. The salesmen will be more willing to work with you if you have financing.
If you do not have pre-approved financing, go car shopping during the week. Banks are (for the most part) closed on the weekends. They work out a rate with you, but then you will need to wait until the next business day to have that rate approved. Sometimes it will not be approved and then you may be stuck with a higher rate. It may be worth taking a day off from work to buy your car.
Check the loan rates before you go shopping. Arm yourself with knowledge. Be a savvy shopper. You are your own advocate.
Buy GAP insurance. When you drive your car off the lot, it begins to depreciate. If you total your new car within the first year of purchase date, chances are your insurance will not pay off the full amount of your loan. They will only pay the depreciated price. GAP insurance covers you for the full amount. It’s not expensive and it’s well worth it. You can always cancel it after three or four years.
My first car wasn’t such a great deal, but I know better now. The next time I’m ready to shop for a new car (hopefully, it won’t be for a very long time), I’ll be armed with knowledge and I’ll be prepared. Doing your homework is always worth the work, although my kids don’t always believe me.
Have you recently bought a new car?
Do you have any advice to share?
I had to laugh at your experience with your first car. It reminded me of the old blue pick up I drove to college. Every time I turned a corner the passenger side door would fly open! It wasn’t a very great vehicle for passengers! I got really good at weaving back and forth to correct the open door. Good advice for car buyers. Thanks!
If you’re going to buy GAP insurance, buy it from your insurance agent, not from the dealer. You’ll be amazed at the price difference.
My first was a 1982 Mazda that I bought with my own money in High School. It was a stick shift and I loved it and mourned it after it was cruelly taken from me up in Perth Amboy NJ on the highway. Reading this makes me smile. I recently bought a 2 year old Acura and am glad to say I followed your instructions (except the GAP insurance) After finding out what my trade in was worth and what the dealer would give, we sold it for way above the dealer price on Craigs list. Keep your good advice coming!