If you aren't an expert when it comes to financing a car, it can seem like a confusing process. But you don't have to be an expert to find yourself a good, financially sound deal. There are several things to always keep in mind. Here are five helpful tips to get you started before you go to the dealer:
- The sticker price is not always the same as the real price of the vehicle. Unless you purchase your vehicle from a "no-haggle" or "no-hassle" dealership that won't budge on the price, the dealership expects you to haggle on the price, so make sure you do. The dealership wants your business. If you want to buy the vehicle right now, chances are they will try their best to make it happen
- Zero down, zero interest, and zero payments for one year may sound very tempting, but in the long run it will actually be worse off for you financially. Within the first year of these types of payment plans, you may not owe a thing. Then, you get stuck with above-average interest rates and larger payments. This happens because in your "first free year," the dealer isn't actually paying for your car payment. You still have to make those payments, except they will be larger and in a shorter time period
- Make sure you find the best financing possible for you. A lot of dealerships advertise incredible financial plans, but in reality, only a few select people with above-average credit will be eligible for this. This leaves those who aren't eligible to pay several times more over their financing term. Check your bank or credit union to see what financing options they can offer you before heading off to the car dealership
- Look out for hidden "extras" on the final bill of the vehicle you purchase. Keep an eye out for things such as rust protection, fabric protection, and tinted windows. Be sure to cross features such as these off of the invoice if you don't want them. Most vehicles actually come with a great rust protection from the factory, so you don't need to buy it from the dealer. Dealers make a large amount of money by adding items that look important onto the bill, even if they really aren't. If the dealer says it all "comes with the vehicle," then either walk away or tell them you want one without all the unnecessary extras
- Don't let the dealer talk you into an extended warranty if you don't want it. Extended warranties are very overpriced and, chances are, you don't need them. Most new vehicles today come with great factory warranties that cover the vehicle up to 100,000 miles. Unless you need it to be longer than that, don't buy it
Before you finance a car, it helps to have a thorough understanding of the different issues involved in financing a vehicle. Although you may not be a financial expert, following these guidelines above will help to assure you get a good deal when financing a car.