By Jerry Jackson, Military and Family Readiness
Joint Base San Antonio-Lackland
Editor’s note: Occasionally, we like to bring helpful articles to our Airmen and their families. This blog post is the first in a series about personal finance and is adapted from a class offered at Military and Family Readiness.
At some time for most Americans over the age of sixteen, we will make at least one auto purchase, and then we’ll probably make an occasional purchase about 10 -12 times more.
Whether it’s because you need a vehicle or just want one, there are some tips to help make the event enjoyable while saving money. First thing to remember is never go to a dealership alone especially if you’ve never made a prior auto purchase.
Before you go to buy a vehicle, you should consider these things at a minimum:
1. Doing due diligent research. There are many online sites that can aid in this endeavor. You will want to know what the dealership paid for the vehicle, what similar vehicles have sold for in your area, and what amount is paid for used vehicles you are considering purchasing. Some financial institutions have a car buying service that can give you this and other research info.
You can also go to an auto dealership to gather information or get brochures. Remember to go with someone who is knowledgeable in car buying. You are not signing any paperwork, letting your credit report be pulled or buying an auto. You are doing research only. You should leave the dealership after you’ve gotten your information. Go home or somewhere to review what you have.
2. Arrange preapproved financing. You should start with your current financial institution to see if you qualify for a loan. If you do, then you should shop around to other institutions to see if you can get better terms or a better Annual Percentage Rate (APR) of interest. You can also inquire with the dealership about financing. If they cannot give you better terms or APR then you will already have the preapproved loan as backup.
3. Shop around for items you will need and want after you own a vehicle such as Guaranteed Asset Protection (GAP) insurance or extended warranty coverage. Just as you did for financing, you may be able to get these items from your financial institution if they financed a loan for your auto.
You should now be ready to go to the dealership intending to buy a car. Below are some minimum items you should consider prior to finalizing the deal and signing a contract:
1. Inspect the vehicle you’ve decided to buy. Compare it to similar vehicles– same make and model at different dealerships or different makes and models. Flip all switches, turn all knobs, look inside and out, check for spare tire and jacks. Review all items that should come with the auto and that you need or want to enjoy the vehicle. Sit in the vehicle to note how comfortable you feel behind the wheel and in the passenger seat.
2. Drive the vehicle like you would if you owned it! Don’t baby the vehicle. Get it up to the usual speed you will go when normally driving to observe how it handles. Get on the freeway. Note how it reacts when the brakes are applied.
3. When you are satisfied with the first two steps, you are ready to negotiate the purchase price you are willing to pay for the vehicle you want. Refer back to your research info. Stick to the amount you are willing to pay for a certain model vehicle. If the salesperson or dealership resists accepting a reasonable offer, you should be ready to leave the dealership. The dealership will probably contact you within a few hours or days with a counter offer that is closer to what you are willing to pay. If not, then be willing to go to another dealership in the same town or another city.
Once you and the dealership have come to an agreement on price, you want to get a purchase order in writing.
4. Negotiate for extras. Ask the salesperson or dealership what they are willing to add to the deal to entice you to do business with them. Ask for the big ticket items. You can do things or services like oil changes or car washes yourself. Ask for a second used auto, computers, tablets, window tinting, extended warranty, satellite radio service for a year or more, high quality floor mats and other expensive items. Again, if you want to get any extras added to the purchase order or document you should get a separate signed document.
5. If you’ve gotten this far, now will be a good time to discuss trade-in of your old vehicle. If the salesperson or dealership resists discussing trade-in at this point or giving you fair market value for your vehicle, then you can always sell it later yourself. Get this transaction in writing.
6. You are at the point of completing the deal. The dealer will have you talk with their finance office. Once again, you can discuss their financing, but you will already have pre-approved financing. Avoid pointless dealer services such as VIN etching, fabric protection or paint sealant.
Take a look at the fees. Compare them to what you found during your research. You will want to review all documents and figures. If anything is missing or any figures have been changed, then you want them corrected prior to signing a buyer contract.
7. Finally, you can take possession of the vehicle at the dealership or have it delivered to you. Either way, make sure there are no dents or scratches on the body or the wheels. Check that all the equipment is included, such as floor mats, owner’s manuals and rear-seat DVD headphones. Your new car should also come with a full tank of gas. If anything is missing or needs repair, ask for a “due bill” that puts this in writing.
Don’t forget that your entire leverage with the auto dealer lies in your ability to walk out the door. No car salesperson is going to take a loss on a sale, but even a few hundred dollars is better than a dead deal. You don’t need to be obnoxious about it, but be firm in what you’re willing to pay and accept in the negotiations. If the dealer is smart, it will come to terms that are acceptable, make the deal quickly and try to pull a fast one on the next person, but if a salesperson insists on trying to gouge you, then gather your things and politely say goodbye. Buying a car is a serious commitment. And remember, there is no cooling-off period. Once you sign the contract, the car is yours.