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10 Things to Consider Before Buying a New Car

Used-car prices are falling for the first time since the Great Recession.

Do you need the “LX package?”

A base-level Volkswagen Passat runs about $20,000, but the sticker on the window of the “V6 SEL Premium” version reads “$34,265.” That’s a 71% increase, and those prices represent very different categories of rides. For $38,000, you can drive home a Mercedes C250. Yeah, I know, the Benz has a four-banger compared with the Passat’s V6, but here’s the point: Options can add up in a hurry. Do your bank account a favor by driving a base model car—and start your price negotiation there, too. Even if you can’t live without a moonroof or some other option, ask the salesman for a price on the base model. Then tell him to throw in the moonroof and he’s got a deal.

What the hell is a “destination charge?”

It’s a fee for getting a new car to the dealer, and you’re going to pay it whether you’re buying a Durango in Detroit or a Porsche in Pittsburgh. Don’t fight it. But you may be able to negotiate the “marketing fee,” which the dealer imposes to help lower advertising and marketing costs. And Quincy says most people don’t come out ahead when they buy the extended warranty. “Take that $700, put it in a savings account, and use it as an emergency fund.” Or a “sound system” fund. Your call.

Two more things to remember:

First, car dealers are businesses, and they need to make a profit. So once you get a fair offer, take it, and drive home happy. Second, when you are looking for a loan, try a credit union. Seriously. They’re easy to join, and their rates are actually lower than what you can get at a bank. PenFed, for instance, was recently offering car loans at just under 1%. How can they do that? Well, let’s boil it down to car terms: Picture a credit union CEO’s car. Now picture a bank CEO’s car.

How to Purchase Your Dream Car >>>

Jack Otter is the author of Worth It…Not Worth It? Simple & Profitable Answers to Life’s Tough Financial Questions.

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