Car Buying For Beginners – The Do’s And Don’ts

January 27, 2020 Stu Q

In the last 18 months, I have been privy to the purchasing of nearly 6 cars. One for my household, and five for friends. During this time I spent a great deal of time scouring the internet resources on car buying. In short, there is plenty of information out there for the potential buyer. After some time, I found myself being obsessed with trying to find more information on the cars I wanted, even if I already knew pretty much everything there is to know about it. I know there are others out there just like me. On the other hand, you have people like my wife, who simply want to buy the car the same day they learn about it. Go to the dealership just to “test drive”, then come home with a new car.

In the end, I ended up purchasing two cars within a week of each other. My wife got the car she wanted, and I got the car I wanted. It was a euphoric sense, being able to get the cars that we both wanted. However, this sense of happiness lasted about a week. It soon turned to buyer’s remorse and the feeling of, “What did I do…” The feeling took about two weeks to really wear off, but it still creeps up every once in a while. Many people may be in the same boat. But I can rest assured knowing I made the right decision based on where I was financially.

In looking to buy a car, there is one thing that is most important to do, before I even thought about buying one – check my working budget. I already had an open spot for a car payment from my previous vehicle. All I simply had to do was type in my new payment amount. This was a quick and easy check to make sure I could afford it, and I wouldn’t be in trouble every month when it comes time to pay my bills. Even though I began to have buyer’s remorse for buying my fancy car, I knew financially I was safe. It was simply all in my head.

Now, are you looking for a car, but not quite sure what to do? Use this checklist as a guide for your car-buying journey.

*DISCLAIMER: some of these items are under the assumption that you have a working budget AND follow it. It also assumes you have enough credit to potentially qualify for a vehicle.*

Do your research before you buy
1. Read reviews about the current year’s model as well as previous years. Look for reoccurring issues. Check for resale value. Does the vehicle hold it’s value over the years, or drop significantly when the newer model comes out?
2. Check different websites with the same car you are looking at (same VIN), sometimes one might have a cheaper price. Typically, the dealership will honor the lower price.
3. Check out www.kbb.com, www.cargurus.com, www.edmunds.com, and of course the dealership’s website for possible promotions.
Check it with your budget first.
1. The IDEAL financial choice when purchasing a car is to pay cash for a used vehicle, avoid having loan payments on an asset that is only depreciating as you continue to use it. Unlike a house, a car is not a financial investment. It is a tool to provide you with transportation to and from your destinations. If you do not have the cash for a car, check out the next steps.
2. Loan calculators: with a simple Google search you can find plenty of loan calculators which will allow you to estimate the payments on your car
3. Plug the calculated amount in your budget as a spot check for your financial comfort level
4. Tweak the numbers for down payment, years to pay, and possibly how much you would be able to apply additionally every month. This will also give you peace of mind.
Check your motives
1. What are your motives for purchasing a new car? Currently in a clunker, forking over thousands of dollars in repairs? Or increase your income and want to spruce up your ride? Make sure your motives are in the right place before you decide to purchase. Do you really need the new car right now?

STOP: IF THE BEFORE CALCULATIONS DO NOT ALLOW YOUR BUDGET TO WORK, DON’T BUY THE CAR!!

Once you decide on a car, go in and talk to the seller a few times
1. They will know you are serious and will want to fight for your business.
2. HAGGLE, HAGGLE, HAGGLE! – Remember, the salesmen want to make a deal, make them work for their money (some dealerships have a NO HAGGLE POLICY – check before you attempt to negotiate on price). In our experience, you will get the best deal when you have cash in hand to purchase, rather than working with lenders to make the sale.
3. DON’T BE AFRAID TO WALK AWAY! – This is your car! Be happy with the price, or don’t get it. It is not worth remorse later or putting you in a financial bind.
4. Try to purchase vehicles around big holiday blowout events, and be sure to ask about any incentives for Cash, Lease, or Loan
Decide on how to purchase the vehicle
1. Cash is King if you can afford it. It will always be better on your monthly budget if you don’t have a payment. Also, some dealers will make a deal with a certified check if the amount is within reason.
2. Loans: Maybe you don’t have all cash to put down, but you can afford some for a down payment. If so, the larger the down payment, the lower your monthly payment.
3. Lease: Although I do not recommend a lease to anyone, it might be the best option for some, although very rare. If you are only in an area temporarily, planning on leaving after a few years. Or leasing a vehicle for your business, using tax deductions for your benefit. This is something to discuss with your accountant. A lease is essentially just an extended rental car, and you will pay extra for it, with no collateral or financial gain afterward. Be absolutely sure this is the right method for you, BEFORE you sign.
Extras
1. Be sure to purchase any extra warranties and maintenance coverage, if the price is within reason.
  1. Example: My first maintenance on my new car is $800.00. My second is $600.00. However, I purchased the service plan, which cost me $750.00. Saved me $650.00!!
2. Utilize any and all free services when applicable
  1. Example: Free rentals when the car is in the shop, free concierge service, 24/7 roadside assistance, etc.
3. Don’t waste your money on car accessories through the dealership – you can often find the same thing through www.amazon.com for a much lower cost.

As always, thank you for checking out the posts here, and please be sure to leave a comment below or ask a question.

Until next time…..!