Driving a new car is one of the most exciting experiences known to man. The smell, the pristine seats and dashboard, the fresh driving experience—they all offer a thrill that no other purchase can match.
Unfortunately, such an experience can cost a lot of money. Good cars are expensive, and paying for a car in cash is often impractical or inconvenient. You’ll need a car loan, and that’s something that can cost you money too.
So here are some tips to minimize the cost:
Get pre-approved for a car loan
Before you even go to a dealer, your first step is to shop around for a car loan from banks and credit unions in your area. This can be a powerful bargaining tool when you negotiate for the car. You can ask a dealership if they can give you a better financing offer.
You can minimize the impact on your credit by keeping all your loan applications within a two-week period. All the loan applications you make will count as just a single inquiry. Afterwards, you can settle on a lender, and the pre-approval is good for the next 60 days. That ought to be enough time for you to find a car that you like.
Contact several dealers in your area
You represent a good chunk of money for dealerships, so you should let them know that you you’re talking to several dealerships so they’re well-motivated to provide you with the best deal possible. Ask for quotes from different dealerships.
However, you need to make sure that all these quotes are for the same car model with the same options. And you also need to make sure that the quote is the final amount you have to pay. Some dealerships may actually tack on additional fees later on, and that’s what you have to avoid if you want to save money.
You may show up in person so you can test-drive a car, but after that you need to go back home and negotiate online. There are several advantages to this approach.
First, you can negotiate at your convenience. You’re at home and relaxed, and you don’t waste time waiting while a sales person “discusses” your proposal with their manager.
Also, most of the sales people negotiating online earn their bonuses depending on the volume of the cars they sell, instead of commissions based on the price of the car. That means these sales people are pretty much inclined to give you the best price possible just to entice you to buy the car.
Finally, you can avoid the financing and insurance office where a lot of extra fees are tacked on.
Keep in mind that a car is a constant drain on your future finances. You’ll need to make regular payments on your car loan, you have to pay for insurance, you’ll have to maintain it properly, and of course you need fuel to get from point A to point B. By getting the best deal from your car loan, you’re off to a great start.