Buying a Car? Make Sure You Follow These Tips

Buying a Car? Make Sure You Follow These Tips
The days of being a clueless consumer walking into a dealership and letting the car salesmen explain all of the features of the new models are over. Today, you have the internet on your side. You can learn anything you’d ever want to about any car on the market before stepping foot into a dealership. You can research crash ratings, fuel efficiency, insurance rates, and even build a car with all of your desired options right from the web. With this knowledge comes power and you’re less likely to be scammed by a car salesman. But all of this information is useless if you don’t use it.
If you just walk into the dealership, pick out a car, and do the financing on the spot, you could be walking away having paid hundreds, even thousands, of dollars more, directly or indirectly, than you should have. That’s the old way to buy a car, and even though some people still do this, if you’re reading this you’re already one step ahead.

Here are the top six things you should know to be ready to buy a car at the best total price. Remember, it isn’t just the dollar amount on the sticker that matters since there are dozens of ways to save on car expenses over the life of ownership.
1. Are You Upside Down On Your Current Car Loan?
Welcome to the world of the 60-month (or longer) loan. Newsflash: vehicles are rapidly depreciating assets and the longer you finance them, the longer you’ll be upside down and pay excessive interest. While being upside down on a $15,000 vehicle is not as bad as being upside down on a $150,000 house, it’s still a stupid financial mistake. What makes it so stupid is that cars have a known depreciation rate so you can easily calculate whether or not you’ll be upside down on your loan, how long it will take to pay it off, and what you’ll pay in interest over the life of the loan. You can’t do this with real estate, at least not in this market. Because real estate values can go up and down at different rates over time it’s understandable that some people can be caught upside down. There’s no excuse when it comes to your car loan.
There was a time when car loans were a standard 36 months. Gradually the term became longer to enable more people to qualify for loans they couldn’t really afford, by lowering the monthly payment. The longer the term, the more you’ll pay in interest, so a lower payment is really not your friend. Does this sound familiar? It should, because the mortgage industry did the same thing. The 30-year fixed rate mortgage with 20% down used to be the standard. Over time they introduced zero-down loans, adjustable rates, balloons, ARMs, and even interest-only loans to allow more people to buy something they really couldn’t afford. It’s no different when it comes to buying a vehicle these days.
If you try to sell your car before the loan term is over, you may find that the car is worth less than you owe on it. To buy a new car, you’d have to pay off the balance on the original loan or roll it into the new loan, which creates an even more expensive car. Buying a car that depreciates quickly is another thing that can cause you to be upside down on your loan. If you buy a model that depreciates roughly 20% each year you’re going to lose money on it faster than a car that depreciates maybe just 7-10% a year. Don’t get into a cycle of constantly financing an upside down vehicle and letting your car make you poor.
2. Have You Researched the Trade-In Value of Your Current Car?
Keep the trade-in of your old car and the purchase of your new car as separate transactions. Get the trade-in offer before discussing the price of the new car, or finalize the price of the new car before discussing the trade-in. Some dealerships will offer you a good trade-in but will just raise the price of the car you’re buying, or if they already give you a good deal on a new car they might come in with a low-ball number on your trade. You need to know the trade-in value of your current car so that you have a rough idea of what to expect the dealer to offer for it. If the number is much lower than expected you know you may be getting taken for a ride.
One of the easiest ways to research the trade-in value of your car is to look it up at Kelley Blue Book. Here you can enter your location, vehicle make and model, mileage, condition, and features. It will then give you various prices for private party value and trade-in value. The trade-in value is obviously going to be less than what you’d get selling it privately because the dealership has to make money on it when they resell, so keep that in mind. If the difference is significant, you may want to consider trying to sell it privately first.
3. Have You Researched Interest Rates on Car Loans?
Don’t evaluate the deal based on the monthly payment. This is one of the biggest mistakes most car buyers make. Do you think it’s just coincidence that most car commercials advertise new cars by just stating how low your monthly payment can be? The interest rate is where most of the cost lies if you don’t put a significant chunk down. Know how much you’ll pay over the life of the loan by using a vehicle loan calculator to model some different loan amounts and rates.
One thing you can do before even shopping for a car is to check with your local bank or credit union about auto loans. See what they currently offer and whether or not you qualify. If you go into the dealer already pre-approved for a loan with your bank you know exactly what your interest rate is and how much you’ll be paying. If you wait for the dealer to try and find financing for you you’ll almost always get approved for something, but by the time you get to the financing stage you’re so emotionally sold on buying the new car that you don’t even care about the interest rate and just want to finalize the deal. This could literally cost you thousands of dollars.
4. Have You Considered the Benefits of Buying a Used Car?
There’s nothing like the feeling of buying a new car, but consider the cost. Cars depreciate sharply in the first two years — some models as much as 25-30%. The car you paid $25,000 just two short years ago may be worth only $17,000 now. If you’re someone who keeps cars for 7-10 years or doesn’t bother buying a new car until long after the first one has been paid off this isn’t as much of a concern. You’ll get your money’s worth. But if you don’t think you’ll keep the car 10 years you need to consider the potential savings by buying used. You can buy a car that’s literally only a year old and with only 15,000 miles on it and save 15-20% over new in many cases. The car may have had a previous owner, but it’s still nearly new and carries all of the original warranty. If you think about it, the money you save by buying a slightly used car will probably cover the insurance premiums on that car for as long as you own it.
5. Do You Know the True Cost of Ownership of the Car?
Don’t find out too late that you can afford to buy the car, but you can’t afford to own it, due to operating expenses, insurance, gas mileage, annual excise taxes, and other costs of ownership. You’re not ready to buy a new car until you’ve researched and considered this information. Just like when you buy a house, there’s much more to it than the monthly mortgage payment. This is how so many people get into financial trouble because they are told they can afford the monthly payments, but really can’t afford everything else associated with it.
New car buyers often don’t consider the higher costs of repairs and maintenance for certain models, tires that cost twice as much as those on other cars, higher gas costs, and higher insurance (depending on make, model, and even color). This is especially true once you begin looking at SUVs and luxury models. Insurance rates can be nearly double that of a smaller or less expensive vehicle.
One of the most important considerations is the repair record of the make and model. Does it have a history of problems with the transmissions? Brakes? Electrical systems? What does it cost for routine repairs and maintenance? You can find all this information at Edmunds.com. It doesn’t do any good to find a great deal on a car only to find out you’ll be spending $1,000 a year fixing common problems with that particular model once the warranty is up. This is a great site that can really help you save money and avoid being taken advantage of.
6. Have You Evaluated Any Dealer or Manufacturer Offers Like Rebates or Financing Specials?
A $2,000 rebate on your new car may sound good, but are you sure it beats the low-interest-rate deal the dealer may offer as an alternative? Don’t be fooled by the lure of cash upfront as it isn’t always the best choice over the long run. Evaluate the incentives and offers before you start seriously shopping. Check all of the manufacturer websites, ask your local dealers about incentives, and be armed with your options ahead of time. This will help you make sure you get any incentives you’re entitled to while also objectively comparing the true savings between offers.
The Bottom Line
Do your homework. Don’t roll the balance of an upside down loan into a new loan just because you’re tired of your old car and you’re just ready for something new. Don’t just walk into a dealer without having done your research and expect to be given the best possible deal. Don’t buy a new Lexus just because you can finally afford it if you get a 6-year loan. Vehicles are wealth destroyers, not wealth creators. While it may feel good to impress your friends or commute in style, foolishly wasting money on a vehicle is a sure way to retire broke.

1. "I'm ready to buy now."

This is an admission of weakness and an invitation for the dealer to throw out a price that's slightly below the manufacturer's suggested retail price (MSRP) to see if you'll take the bait. It shows that you're too eager and willing to consider an offer, and it also gives salespeople the advantage by allowing them to talk you up as opposed to you talking them down. But by adding some very precise parameters, you'll sound confident and strong from the start.

"Don't let them know that you're ready to buy without being very particular. If you're ready, say that you'll buy, but only under these particular conditions," says Gentile.

There are two schools on negotiating. Going into the process, Gentile reminds consumers to be wary of the dealer cost. Consumer Reports has something called wholesale price, which is the normal dealer invoice price minus all relevant rebates and incentives. Similarly, most longstanding price-information services advise buyers to research the dealer invoice, along with any relevant incentives, then make a lowball offer that's maybe just a few hundred dollars above invoice. The dealer will follow your figure with a counteroffer that then allows you to go back and forth until there is a compromise.

Conversely, a second school believes that making the first offer puts the buyer in a weak position. "When you make an offer on a car, you're digging yourself into a hole," says James "Spike" Bragg, a consumer advocate and founder of Fighting Chance, an information service for new-car buyers. "That offer will be as good as it gets. There's so much today in 'under the radar' sales incentives to dealers, you don't want to limit yourself."

According to Bragg, many of the dealer incentives today are awarded on a dealer-by-dealer basis, often handed out for meeting sales targets. Because of this, you can't pin down these incentives on a particular vehicle, and you never know which dealership might be able to provide the better price at a given time.

Bragg's method involves faxing quote requests from several different dealerships and asking them for their best bottom-line price on a particular model. His clients sometimes manage to negotiate prices well below invoice, even considering all published incentives. In this day of increased under-the-radar incentives, this method doesn't limit you to a bottom line and certainly has its merits if you're willing to put in the effort.

On ForbesAutos.com you can pursue both options. On each of our Reviews pages there is a link to detailed MSRP and invoice pricing. Also, if you go to our "Buy a Car" section, you can select a model, configure it how you like and then request a free dealer price quote.
Monthly Payment

2. "I can afford this much per month."
"Don't tell the dealer what you're willing to pay per month. This is the biggest mistake a shopper can make. Often the dealer will focus on a monthly payment scheme, insisting you are receiving a great deal, but at the end of the day you won't really know what you paid, advises Gentile.
If the dealer can get a number out of you, a common trick is to ask if you can squeeze out a slightly higher monthly payment, then raise the bottom-line price accordingly by hundreds or even thousands. Avoid this by insisting that you focus only on the purchase price. Walk away if the salesperson only wants to talk in monthly payments. Trade-in
Trade-in
3. "Yes, I have a trade-in."
Don't tell salespeople you have a trade-in until a final transaction price is set. If you do and the deal hasn't been made yet, they may try to distract you with the "great" deal they're giving you on your trade-in as they skimp on the real deal. And if you catch that, they may try writing your trade-up for less.
"You'll see games being played — they'll play one off on the other," Gentile says. Once you've decided on a sale price, then you can see what they'll give you for your old car.
Cash-Only Please
4. "I'm only buying the car with cash."
Car dealers make a significant chunk of added profit when they sell you financing. If you don't at least leave the dealer with the possibility that he or she might sell you financing, you simply won't be getting the best deal. Bragg recommends saying something like "I haven't really thought that through yet. Maybe we'll see what you have after we agree on a price."
But be truly noncommittal with financing, even though it's a good idea to line up tentative Still Debating
5. "I'm not sure…which model do you think I need?"
If you're this undecided, you may end up driving away in a vehicle you neither wanted nor needed. Do the research in advance, and make your first shopping trip a short one. Use this opportunity to gather information and take your spec vehicle for a short test drive. If your uncertainty is apparent, you may end up buying the model with the most add-on equipment, the highest sticker price and, of course, the most profit for the dealer. Before you go shopping, narrow your choices down to three or four vehicles that fit your needs.
My Dream Car
6. "Oh, I've wanted one of these all my life."
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As soon as you've lost yourself in the dreamy vision of that gleaming convertible, the salesperson has you hooked, and your chances of getting a great deal are over. "Don't get caught heavy breathing," says Bragg. "Certainly don't admit to your spouse — with the salesman listening in the backseat — that you're in love with the car." Here's where you need to have a communication plan. Try to sound objective and rational. Point out some pros and cons and be observant and calm. Just don't say that you have to have this car.
What Everyone Wants
7. "I'll take whatever the popular options are."
Don't ever ask for the "popular options" especially on a luxury model that already comes loaded. It's an open invitation for overpriced dealer add-ons such as interior protectant, window etching or undercoating. They're all things you can come back for later. Instead, go through the equipment list at home after your first visit to the dealership and then decide exactly what you need.
Lowest You Can Go
8. "What's the lowest price you can give me?"
Most likely, this question won't be taken seriously, and you will be met with a predictable performance. The salesperson will wince, maybe talk to the manager, fiddle with numbers and eventually come back with a price that probably isn't a very good deal for you. But there may be so much apparent effort in this performance that you'll be pressured into settling for that final number. Don't. To avoid this, make an informed and reasonable low offer, then wait for a counteroffer. Don't be afraid of silence. Conversely, don't be surprised if there's even a little drama.
Doing The Math
9. "Sure, I'll look at the numbers with you."
Perhaps quite early in your visit, the salesperson will most likely make an offer to "just go look at the numbers." Dealers do this when they sense you're undecided, but they want to be in the position of control. Getting you in the office makes it harder for you to back out. Wait until you can call the shots of what you want at what price.
The Haggle Factor
10. "I think you can do a lot better than that."
Never scold or accuse the salespeople. Be polite. Compliment them, and show respect. You'll never get the best price if you talk down to them. At least for the moment, you want them to be your friends. Let the scene play out, but leave when the deal's not good enough by quietly suggesting that the competition across town might be more willing to work with you.


1. Make sure that the car is on level ground before checking it out. This is to ensure that you will be able to clearly check the tires and to see if there is anything sagging on the car.
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2. 2

Carefully check the paint job of the car, taking note of any rust spots, dents or scratches. Look at the sides of the car from end-on for waviness; that indicates paint work. Run your finger along the edges of the joints between panels; roughness indicates residue left from masking tape.
3. 3

Check the trunk of the car to make sure it is still in good condition. It should not show any sign of rust, or water entry due to cracks or holes. Wear inside of the trunk indicates usage of the car.
4. 4

Check under the hood of the car for any indication of dents, damage or rust. These can all be signs that the car was either poorly taken care of or damaged. Each fender, just inside where the hood joins should have the decal with the VIN (Vehicle Identification Number) of the car; if one is missing, that fender was replaced.
5. 5

The hoses and belts should not have cracks, the radiator hoses should not be soft.
6. 6

Go inside the car and check the seats and upholstery of the car for any tears, rips, stains, or other type of damage.
7. 7

Check to make sure the air-conditioning of the car is working well by turning it on to see that it works. If air conditioning is a must buy a car with R134 coolant. Most cars fitted with R134 are 1993 or newer and have a sticker on the AC Condenser.
8. 8

Check the odometer of the car for the mileage. This is important because the mileage indicates the car’s age. On the average, a normal driver will drive between 10,000 to 15,000 miles a year; however, this depends on many factors. Remember, cars age by time and mileage. Buying a 10 year old car with very low miles is not necessarily a good thing.
9. 9

Test drive the car before making any final decisions. This is perhaps one of the best ways to know the condition of the car. Hence, a buyer should make all effort to do a test drive first before coming to any decisions.
10. 10

Check out the car's service history which should give you some information regarding the performances, repairs, and problems of the car. Ideally, the current owner would have kept a record of the times when the car needed servicing and should be willing to show you this information. There are instances where used cars are sold because of past accidents or negative experiences.
11. 11

Be sure to check the brakes of the car by pressing down hard enough on the brakes to decelerate rapidly, but not enough to slide. Try this going around 30 mph in an area without traffic. You should not feel any vibration from the brake pedal, or hear any squealing or strange noises. Brakes that pulsate indicate the need for having the rotors resurfaced or replaced and new pads installed. It should not swerve; this can be caused by a bad brake caliper or worn steering components.
12. 12

Inspect the engine for any sort of leaks, or corrosion. On the engine block, look for any dark brown oil stains, this will indicate that there is a leak in a gasket, and could possibly lead to an expensive repair in the future. Check the brake fluid, and reservoir to make sure its is not leaking. The belts should look new (i.e. not have cracks or signs of drying). Old belts can snap, and if you do not know how to replace them, it will cost between $100-500 depending on which belt goes bad.
13. 13

Remove the oil filler cap. A foam residue on the inside indicates a leaking head gasket. Forget that car. Look at the condition of the coolant in the overflow jar; filthy brown coolant means it's never been flushed and often means a leaky head gasket.
14. 14

Pull the transmission dipstick; the fluid should be pink or red. An old car may be dark but it should not look or smell burnt. It should also be full (check with the engine running).
15. 15

The timing belt is the most important belt in the engine, and is also the most costly to replace. If the car is equipped with a steel timing chain, you don't have to worry about this. Normal lifespan of a timing belt is from 60-100+ thousand miles; this depends on the manufacturer.
16. 16

The tires should be worn evenly and they should match. Look at the surface of the tire for feathering (bad alignment). Bad alignment can be caused by worn steering/suspension components, the pothole down the street or frame damage.
17. 17

Never buy a frame damaged car. Check the saddle (connects the front fenders and holds the top of the radiator). It should not be welded on either side, it should be bolted in. Inspect the bolt heads at the top of the fenders inside the hood; scratch marks indicates that the fenders have been replaced or realigned (after a crash). Look for welds inside the door jambs.
18. 18

If you are able, try to get under the car when it is safely raised and inspect the exhaust system or any under-body rust. This is also the time to inspect for frame or unibody damage.
19. 19

It is definitely worth the money to go to a mechanic and have them inspect it. This will cost some money, but its better to pay 50-75 bucks to get a car inspected and find out its not worth the investment, than to spend $10,000 on a car and find out within a few months, you are going to have to spend more money on repairs for it.
20. 20

Do not pay sticker price. A used car is a negotiable item. Do not feel the need to pay the price they are asking. The dealer bought this car at a low price, and is turning around and selling it for much more than they purchased it with the notion that they might have to lower that sticker price. Depending on the quality of the vehicle, feel free to offer a price. Be sure that it is a reasonable offer. If the dealer is asking $15,000, do not offer $10,000. It is merely an insult by doing this. If the car is over $10,000, try to negotiate at least $1500 off of the car. You can pre-qualify yourself at your bank or at a Credit Union. That will determine what you can spend for a car. Try to buy a car that is less than they tell you. Most people try to buy more car than they can really afford. Remember, no matter how good that car is today, it is going to require maintenance in the future. Use parts of the car that are unflattering to your advantage. If a car is not the color you are looking for, tell the dealer "I really like the car, but I don't like that it is green, that is the only thing holding me back from buying it" The dealer will see that you want it, and find some way to get you into that car.
21. 21

If purchasing from a private sale it can be beneficial to the price negotiation to bring a pen, paper and cell phone with you. As you make your inspection of the car be sure to record all items which are damaged or will require replacement. After you have collected a list of what you believe the car will require you can telephone auto parts stores to check the price and availability of replacement parts. Once you know how much the car will cost to repair if you buy it you can make an informed decision on what you would like to pay as well as increase the likelihood that the seller may reduce their asking price.


Tip 1: Get the Car Checked Thoroughly
Make sure you have a thorough mechanical inspection done on any car you are seriously interested in buying. You will not want to get a lemon when you are purchasing a car. If you need some help buying a car, you can ask a friend or relative to help you. If you know someone that understands cars and knows what to look for when buying one, you should take them along with you.
Tip 2: Don't Rush Your Buying Decision
When you are not sure about a car, you need to think about it hard. You will want to take some time and think over your options. Take the vehicle you are considering for a decent test drive. You will want to take it up hills and down the other side. You need to test the power and the brakes. You will also want to make sure that all the bells and whistles work as well as the basic

Some Cars Are Older than Others Photo: Batbob via flickr
Tipe 3: Negotiate on Repairs
If something is broken on the car, you may be able to get the seller to fix it before you purchase it. You need to be aware of things that alarm you when you are looking at a car to.
Tip 4: Listen to Your Instincts
If your gut says something is wrong with the deal, the car or the seller. Walk away. There will always be another deal - a car is not worth stressing over.
Tip 5: Check the Car's History
The thing with a used car is that you are purchasing a car that has been used and probably abused by someone else. You are taking the risk and hoping that the car has not been abused. Everyone always seems to go when the warranty goes so you want to think that the car is going to last at least a year before something goes on it. To help you with you purchase you should always get the VIN number of the car and go to a site online, car fax, to get a car history report.
Tip 6: Know Your Legal Rights
The good thing about purchasing a used car is that every state has a Lemon Law. The lemon law basically protects you for a short period from unlawful dealings. If you purchase a used car and you have a five-year payment plan, you should at least expect the car to last until the payments stop. Before you go to the dealer and sign the paper, ask your dealer about the lemon law and what they have to say. Then look it up for your area and see what the difference is. If he is shady in stating a law that he knows fully about, then you need to move on.
Don't Buy This Car!
Tip 7: Do Your Research
These days its easy to work out the going rate for a used car. Look up the make/model/year of the car you are interested in buying on eBay and craigslist, gumtree and other similar sites. That way you will know what the price should be before the seller name's theirs!
Tip 8: Look Past Grooming
A car should be clean: but if its not that doesn't necessarily mean its been badly treated. It might just might mean that the seller hasn't had time to groom the car.
Tip 9: Know How to Negotiate
There are normally more cars for sale than buyers. Know the golden rule of negotiating: the first person who names a price: looses. Ask the buyer what there price is: even if they have already published it. You'll be surprised how often it will decrease if they think they have a chance of a sale
Tip 10: Sleep On It
Be prepared to walk away. If you are being pressured: walk away. If you are unsure: walk away. There is always another car anoher day!


1. Make sure you are getting the right vehicle.
This seems obvious, but you could wind up an unhappy car owner if you haven't thought carefully about how many people and how much luggage or gear you need to carry.
2. Assess the worth of your old car.
Whether you plan to trade it in or sell it, your current car can be an important factor in your budget. Checking the right Web site and maybe your local newspaper will give you a realistic valuation. Selling it directly instead of just trading it may also mean a sizable difference in what you get for it, though it may take a while longer to reap the proceeds.
3. Decide whether new or used is best for you.
Cars are built better now than in the past, so used cars make a lot of sense. But if you get a rebate or other cost break, the math may be on the side of a new vehicle.
4. Consider whether leasing or buying makes more sense.
Leasing provides lower monthly payments than buying with an auto loan. But it's not for everybody. If you don't have money for a down payment or if you trade your car every two or three years, you may be a good candidate for a lease.
5. Do your homework and set your target price.
The Internet has made it easier than ever to find out the dealer's cost for each vehicle and its options. That's the first step to getting the best possible deal.
6. Shop for money before you shop for the car.
If you plan to buy with a loan, check your credit union or local bank quotes online to find the lowest rate. Getting a pre-approved loan will give you added confidence in negotiating a good price.
7. Negotiating a lease.
In the complicated world of leasing, the dealer will have the upper hand unless you learn the jargon and how to negotiate the various segments of a lease deal.
8. Negotiate a purchase.
If you are doing it yourself, get bids from several dealers, keeping the focus on the dealer's invoice price, which you will know from your research. You may be able to get bids without going to showroom after showroom.
9. If you hate haggling, consider using a car-shopping service.
Auto-buying services, such as Web sites or discount clubs, make things easy with pretty good, no-haggle prices. But with most of them, you get quotations from only one dealer. Consumer services that shop several dealers near you may deliver even better prices.
10. Don't let the deal-closer close out your savings.
The finance manager isn't there just for the paperwork. He or she wants to sell you high-profit financial and mechanical add-ons. These are seldom worth the money

some of my personal tips are

buy within your means
don’t look desperate even if you are
if possible check your local rental dealer see if can rent a similar or exact car for a day or two
finance over 3 years ... saves interest
looking at your travelling what are extra’s you really need that’s not negotiable
maintenance ... how much will it cost to service at the dealers
test drive the car with a load and without J