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Buying a car

Buying a car

Buying a car

One of the most common purchases you'll make is car shopping. There's a lot to consider and so many small details to remember. That's why it's really essential to understand that buying a car is more than just finding a good deal on the latest model of a vehicle. It's an opportunity to have a nice vehicle that is fully paid off.But many Americans make big mistakes buying cars. Take new car purchases with a trade-in. A third of buyers roll over an average of $5,000 in debt from their last car into their new loan. They're paying for a car they don't drive anymore. Ouch! That is not a winning personal finance strategy. New cars these days have better safety features and more tech gizmos than models from a decade ago. And let's face it: Trading in a beat-up clunker with grimy seats is an enticing idea.

Car

"The single best advice I can give to people is to get preapproved for a car loan from your bank, a credit union or an online lender," says Philip Reed. He's the autos editor at the personal finance site NerdWallet. He also worked undercover at an auto dealership to learn the secrets of the business when he worked for the car-buying site Edmunds.com. So Reed is going to pull back the curtain on the car-buying game.So Reed says having that preapproval can be a valuable card to have in your hand in the car-buying game. It can help you negotiate a better rate. "The preapproval will act as a bargaining chip," he says. "If you're preapproved at 4.5%, the dealer says, 'Hey, you know, I can get you 3.5. Would you be interested?' And it's a good idea to take it, but make sure all of the terms, meaning the down payment and the length of the loan, remain the same."

So at the dealership, Reed and Van Alst both say, the first step is to start with the price of the vehicle you are buying. The salesperson at the dealership will often want to know if you're planning to trade in another car and whether you're also looking to get a loan through the dealership. Reed says don't answer those questions! That makes the game too complicated, and you're playing against pros. If you negotiate a really good purchase price on the car, they might jack up the interest rate to make extra money on you that way or lowball you on your trade-in. They can juggle all those factors in their head at once. You don't want to. Keep it simple. One thing at a time. Once you settle on a price, then you can talk about a trade-in if you have one. But Reed and Van Alst say to do your homework there too. A little research online can tell you what your trade is worth in ballpark terms. Reed suggests looking at the free pricing guides at Edmunds.com, Kelley Blue Book and NADA. On Autotrader, you can also see what people in your area are asking for your car model. And he says, "You can get an actual offer from Carvana.com and also by taking the car to a CarMax, where they will write you a check on the spot." (Source: www.npr.org)

Buy

"We're actually living in a golden age of used cars," says Reed. "I mean, the reliability of used cars is remarkable these days." Reed says there is an endless river of cars coming off three-year leases that are in very good shape. And even cars that are older than that, he says, are definitely worth considering. "You know, people are buying good used cars at a hundred-thousand miles and driving them for another hundred-thousand miles," says Reed. "So I'm a big fan of buying a used car as a way to save money."NPR has a personal finance Facebook group called Your Money and Your Life. And we asked group members about car buying. Many said they were shocked by how much money some other people in the group said they were spending on cars. Patricia and Dean Raeker from Minneapolis wrote, "40 years of owning vehicles and our total transportation purchases don't even add up to the cost of one of the financed ones these folks are talking about."

Dean is a freelance AV technician, and Patricia is a flight attendant. They say, "our nicest, newest purchase was a 2004 Honda Accord for $2400, bought last year, that with regular maintenance could likely last another 100,000+ miles." And they say they "can't understand those who insist on driving their retirementBuying a car can offer some advantages over leasing a vehicle, but if you’ve never purchased a car before, then you may not know what to expect. There are different ways to buy a car, as well as different ways to pay for it—and, of course, it’s important to make sure that the purchase is legal. If you’re gearing up to buy a car for the first time, here’s a closer look at what’s involved in the process. (Source: www.investopedia.com)

Use

Before you purchase your used car, whether that's through a dealer or from a private owner on a website such as Craigslist, you'll have to figure out how you're going to pay for it. Not everyone is able to lay down the cash for a car in full—even for a used one. Those who can't have to consider financing.A cheaper way to get yourself into a used car is to lease one. And yes, you can lease a used car. But not all dealerships offer used car leases and there are certain conditions. According to Edmunds, it must be certified pre-owned. The mileage must be under 48,000 miles and the vehicle must be less than four years old.

As many as 16% of buyers of used cars don't test drive the car before making the purchase. On the other hand, first-time buyers of new cars test drive as many as seven new cars, on average, before making a purchase.While many people test drive cars before purchasing, few have used cars checked out by mechanics before finalizing the deal. Even if you have to pay for the inspection yourself, it could save you a lot of money in the long run. However, it's possible to have the seller pay for the inspection. If the seller is a car dealer, chances are it's already an offer, but make sure it is. If it's a private seller, they probably won't offer, so it's important to ask.(Source:ww.investopedia.com)

 

 

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