The purchase of a new vehicle is one of the most important financial decisions you will make. There are many items you must consider when purchasing a vehicle such as:
- How much vehicle can you afford?
- Should you purchase a new or a used vehicle?
- Should you lease rather than buy?
- If you have a trade-in, how should it factor into your decision?
Fortunately, the auto dealerships of the world have made it very easy for us to purchase new vehicles. They will seamlessly guide and direct us into a decision, thus saving us from all of that difficult decision making. Whoa, wait, stop! While there are some wonderful sales people, you must remember that the customer is their commission. The salesperson is not going to be around each month when you are struggling to make a vehicle payment. Or when that used vehicle spends more time on the side of the road than on the road. The bottom line is that the salesperson is not your friend so you need to make your own decisions. Here are some tips to help you make a sound financial decision regarding the purchase of a new vehicle.
Do your research prior to going to the dealership. The three major decisions you should research are:
- What type of vehicle do you want/need?
- How are you going to finance the vehicle?
- Do you have an existing vehicle that you need to sell?
Keep in mind that each of these decisions are separate items. The dealerships prefer to lump all of these items into one but you must insist each item be considered individually in order to obtain the most favorable results.
Research the type of vehicle that you want and need. Does a truck or SUV suit your needs better than a car? What type of gas mileage best suits your lifestyle? What amenities are important to you? Not all vehicles cost the same to insure so talk to your insurance agent about the costs for the vehicles you are considering. Remember, you will be at a severe disadvantage when entering the showroom if you have not done your research. The salesperson knows all there is to know about the vehicles, research will level the playing field.
Research how you want to finance your vehicle. Would it be better for you to lease rather than purchase? Talk to your financial institution about obtaining pre-approval for financing. Also, there is much more to your decision than the monthly payment. If you are discussing financing with the salesperson, do not reveal how much you want your payment to be each month. Anyone can get you the desired monthly payment but it might be at an extreme cost to you. Instead, you want to focus on the interest that is being charged, as well as rebates and other financing offers.
Research how you can obtain the most money for your current vehicle. Would it be better to use your vehicle as a trade-in? Or, should you sell it separately and then use the money as a down payment?
Don’t be rushed into making a decision. Once you have thoroughly completed your research, you will be better able to make a sound financial decision. However, do not let the salesperson rush you into making a decision. Gather your information and go home. Make your decision away from the dealership and away from the salesperson. Trust me, if the vehicle you are considering happens to sell while you are away making a decision, the salesperson will find you another one just like it or very similar. The risk of losing a certain vehicle is not as detrimental as the risk of making a bad decision because you were rushed.
Despite all of your research and best efforts, it is still possible to make a wrong decision. Discover your rights and the dealer's obligations after the sell in the article Consumer Rights Following the Purchase of a Vehicle.
Have a question about purchasing a new vehicle? If so, post your question in the Home Finance forum today.
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