Cars: After Divorce, Five Money-Saving Tips to Keep from Overpaying for a Car
Even if you made out well financially as a result of a generous divorce settlement, you probably don’t want to overpay for a new car. Shopping for a new vehicle can be an intimidating and time consuming endeavor, especially if you’re a newly single woman who is confronted with a fast-talking, male chauvinist salesperson. Regardless of how much you actually know about cars, the Internet is a powerful tool that can help prevent you from spending too much on your new car purchase.
With a few clicks of the mouse, you can determine how much other people in your geographic area have recently paid for the car (and vehicle configuration) you’re planning to purchase, plus you can get a good idea of how much your dealership actually paid for the car (and how much profit they’re hoping to make off of you). The following tips can help you save money when shopping for a new car: Define your needs, and balance them with your wants.
First, focus on your budget.
The average person should not spend more than 20 percent of their gross monthly income on car-related expenses (including their car payment, insurance, gas, parking and vehicle maintenance combined.) Next, evaluate your driving habits and needs. This will determine the category of vehicle you’ll want to purchase, whether it’s a compact car, two-door coupe, standard sedan, an SUV or a pickup truck, for example. Will the vehicle be used mainly to commute alone to and from work, for trekking long distances in poor weather conditions, or will be you transporting young kids around town? Consider how important fuel economy, passenger space and stowage capacity is to you. Only after you’ve defined your needs should you consider your wants, including what optional accessories you’d like to add to the new vehicle to customize the driving experience.
Before you start car shopping, determine your credit score.
This will directly impact how much of a car loan you can qualify for. You’ll also need to determine the approximate value of your trade-in, plus calculate how much of a down payment you’ll be able to make. Shop around for the best new car financing rates and deals. New car dealerships won’t always offer the best financing deals. Check with your local bank or credit union, plus shop online for financing opportunities from websites like Bankrate.com or LowerMyBills.com.
Evaluate the manufacturer’s suggested retail price (msrp), which is the price of the vehicle set by the manufacturer.
This, however, is not typically the price people pay for the vehicle after they’ve negotiated and taken advantage of rebates. You’ll also want to compare the invoice price / dealer sticker price (how much the manufacturer charges the dealership), base price (the suggested retail price of the vehicle with all standard equipment and factory warrantee, without accessories and options), and Monroney sticker price (the price displayed on the vehicle’s window by law, which includes the base price of the vehicle, plus all options and accessories that have been added to the specific vehicle you’re looking at).
While negotiating the lowest possible purchase price for a new vehicle is important, pay careful attention to what your monthly payment will be if you’ll be financing the vehicle. Be sure to consider vehicle excise taxes, gas, parking, maintenance and insurance in order to determine if you can actually afford the monthly car payment being proposed. When you begin working with a new car salesperson, never initially discuss how much you can afford, or your trade-in’s value, or the dealer’s financing rates until after you’ve negotiated your best price for the new vehicle you’re interested in. Only then should you embark on a separate negotiate to get the most money possible for your trade in, and/or the lowest interest rate for your financing deal.
Instead of purchasing a brand new vehicle, consider a Factory Certified Used Car.
This can save you thousands, plus allow you to purchase a more expensive vehicle than you could otherwise afford. A Factory Certified Used Car has been refurbished to a like new” condition and can be purchased only from an authorized dealer. It comes with a warrantee that’s equivalent or better than what’s offered with a new vehicle. When buying a new vehicle, you need to know exactly what people are actually paying in the marketplace.
“There’s a lot of confusion among consumers when it comes to vehicle pricing, particularly in terms of new vehicles. Most people know they should not have to pay the sticker price for a vehicle, but they’re not sure what do to,” explained Jack Nerad, executive editorial director of Kelley Blue Book and co-host of the America on the Road radio show. Knowing approximately what the dealer has paid the manufacturer for the vehicle can help with your negotiations. The thing to keep in mind is that the dealer invoice price typically does not reflect manufacturer to dealer incentives, which could add up to several thousand dollars of additional profit for the dealership. “We offer what we call the New Car Blue Book Value Price, which is the price that people are typically paying in the marketplace. This price is based on the vehicle as you choose to equip it, and it’s localized to your geographic area,” added Nerad.
Use the internet.
The Internet should be used as a research tool to learn about specific vehicle makes and models, and to read detailed and professionally written reviews about them. Plus, you can shop around for the best prices.
“At Autobytel.com, we take great pains to provide information for the everyday consumer. We offer real-world recommendations for people. When you read a car review, you’ll learn how that vehicle will treat you on your daily commute, for example, and how reliable it is. You’ll discover how that vehicle will behave when you drive it and how reliable it will be several years in the future,” said Brian Chee, managing editor of Autobytel.com. You can learn from a website like ours how popular a specific vehicle make and model is, and how long it typically sits on a dealer’s lot. If you know a vehicle has been on a dealer’s lot for a while, you have much more price negotiation leverage, especially if demand for that vehicle is low. A savvy shopper will also go online to determine which manufacturers are offering incentives, rebates and special financing deals. These are all opportunities to save a considerable about of money.”
As a car shopper, it’s important to understand that all makes and models of vehicles are not the same in terms of quality. Two car models may be priced the same, but be very different in overall quality, or in terms of what’s included as factory-installed features. Never buy a car because it’s cheap. Buy the best car you can afford, based on reviews, reliability, depreciation value, and safety ratings. Make your buying decisions based on solid data,” added Chee. If you buy a cheap car, but it winds up having to be in the shop often, ultimately, you won’t save money, plus the vehicle will depreciate in value a lot faster, which means its resale or trade-in values diminishes.”
Mark Perleberg, the lead automotive expert at NADAguides.com believes that every car purchase should include four separate considerations, including: How much do you want to pay for the car How much of a down payment you can put down How much you can get for your trade-in What you want your monthly new car payment to be If you know this information and can convey it to your salesperson, the process of buying a car will go smoother. Remember that, as the consumer, you always have the ability to simply walk out of a dealership and take your business elsewhere. If you think you’re being ripped off, or you’re being treated poorly, go elsewhere. It’s that simple. There are plenty of new car dealers who want your business and who will work for it,” stated Perleberg.
FOR MORE INFORMATION:
American Automobile Association This site offers vehicle buying tools, car reviews and ratings, insurance information, plus vehicle financing referrals.
Autobytel.com Here, you’ll find a comprehensive, free resource for new and used car shoppers that allows you to quickly compare vehicles, obtain price quotes and read reviews.
Kelley Blue Book Obtain accurate and timely new car pricing, plus read reviews and compare car makes and models.
Consumer Reports Read reviews of new cars, plus learn about safety records and results of consumer satisfaction surveys.
Edmonds Here you’ll find a comprehensive web site offering free educational information for car buyers, plus you can access online buyer’s guides and reviews.You can also research specific vehicle pricing, using the site’s proprietary True Market Value system. It allows you to determine what other people in your area have recently paid for the exact make, model and vehicle configuration you’re looking at.
J.D. Powers Read the results of independent consumer satisfaction reports and safety records for virtually all new car makes and models.
