As you begin to think about things to consider before buying a new car, the fun can frequently outweigh the practical elements. You can see yourself driving that new car, hear the open road, and taste the new car smell! But hold on. One of the largest expenses you will incur other than a house is for a new car.
Smart buying and regretting a buying decision frequently boil down to the preparation that you do before you step onto a dealership lot. Here is a guide to the essential things to consider before buying a new car. From budgeting for hidden costs to choosing the right fuel type, ensure you drive away with confidence.
Establish Your Realistic Budget
The first and most critical step involves looking at your finances with complete honesty. Many people only consider the monthly payment but that looks at the cost of ownership in the wrong way.
Look Beyond the Sticker Price
The manufacturer suggested retail price (MSRP) is only the minimum price. Taxes, registration fees and the destination charges have to be taken into account. These addons can add thousands of dollars to the bill.
Calculate Your Total Monthly Car Expenses
The amount you pay on your car should be no more than 10-15 percent of your net income per month. But the payment itself isn’t the only monthly cost. The cost of insurance, fuel, maintenance, and parking can add up fast! Make a spreadsheet that lists all of the potential costs, so you can see the full picture before committing.
Get Pre Approved for Financing
When you go to a dealership with pre approval from your bank or credit union you have some leverage. You will be aware of which interest rate you qualify for on the basis of your credit score. Financing rates are usually higher at dealerships to increase the dollar value for the dealer, so it is desirable to have a financing rate of your own so that you can negotiate against it.
Determine Your Must Have Features
Prior to you begin looking at models, list out specifically what you really need and also what you would just like to have. This separation will help you use your time more efficiently and not spend too much money on features you don’t use often.
Safety Features Take Priority
Newer cars are equipped with a variety of safety features. Blind spot monitoring, automatic emergency braking, lane departure warning, and adaptive cruise control are no longer going to be considered a luxury. They’re starting to be used on most models. Determine what safety factors are must-have for you and your family.
Technology and Convenience
Need Apple CarPlay or Android Auto? Do you need a top-notch sound system? What about heated seats or panoramic sunroof? All of these features can contribute to expensive components on the vehicle. List them in the order of their importance, which you can use to make a choice if necessary.
Practicality Matters
Consider the way you live your life. Whilst some families may have children requiring car seats, do they? Do you often transport heavy objects? Do you need to park close to others in urban settings? The answers to these questions will help you narrow down your options to a sedan, an SUV, a truck or a hatchback car.
Research Reliability and Resale Value
Some cars are more reliable and will retain their value over the long term while others will not. This is one of the most overlooked things to consider before buying a new car.
Check Reliability Ratings
There are organizations such as J.D. Power or Consumer Reports that have in-depth reliability data from thousands of owner surveys. Search for models with positive scores for multiple model years. You’ll be spared of big repairs in the future if you choose a vehicle with a great reputation for reliability.
Understand Depreciation
The depreciation rate for new vehicles is quite high. There are brands that can hold their worth better than others. Certain vehicles have a better resale value than others, such as Toyota, Honda and Subaru, and luxury brands may lose value more quickly. If the intention is to sell or trade-in the vehicle within 5 years, resale value should be a significant consideration.
Compare Fuel Efficiency and Operating Costs
Gas prices always change, but fuel will be something you will always have to pay for. Spending hundreds or thousands of dollars can be saved by choosing a vehicle that is fuel efficient.
City vs. Highway Driving
For those with primarily city driving, check the City MPG ratings of the cars. Hybrids and EVs are great in stop and start traffic. Highway drivers may find that a diesel or a small turbocharged engine is more efficient.
Consider Alternative Fuels
Electric vehicles and hybrids are becoming more cost effective and viable. Don’t assume they will be without, see if they are available at your home or work. Find the five-year cost of ownership difference between electricity and gas costs. The amount of savings may be surprising.
Maintenance Schedules
A good portion of vehicles need high-maintenance gas, producing extra expenditures. Others have high maintenance costs such as timing belt changes or particular transmission fluid changes. If you are interested in a particular model, research the maintenance regiments for that model and include those costs in your budget.
Evaluate Safety Ratings
The safety aspect should never be afterthought. Today’s cars are designed with sophisticated safety features and driver assist systems that can help prevent accidents and keep drivers and passengers safe.
Check Government and Insurance Ratings
The National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) run extremely thorough crash tests. Consider looking for vehicles with the highest ratings in each category. Vehicles obtained either a NHTSA’s 5-star overall safety rating or a Top Safety Pick+ designation by IIHS are well protected.
Advanced Driver Assistance Systems
Examples of added functionality include forward collision warning, pedestrian detection and automatic headlights. There are better systems than others! Check out their reviews and demo videos to see their systems in action.
Consider Insurance Costs
You may be able to purchase the car you want but not the insurance. Insurance companies take into account the safety record of the vehicle, repair costs, its theft rate, and more to determine the insurance premiums.
Get Insurance Quotes Before You Buy
After you’ve whittled your options down, get your insurance agent to give you quotes for each of these. One car could be a lot more expensive than another in the same price range. This information can impact on your decision.
Factor in Safety Discounts
Any car that has advanced safety features may be eligible for insurance discounts. Have your agent discuss any possible reductions in the cost of cars with automatic braking or anti-theft devices.
Take a Thorough Test Drive
The test drive is your chance to experience the vehicle firsthand. Do not treat it as a casual spin around the block. Approach it with the same seriousness as you would a job interview.
Drive in Real Conditions
Drive the car on the highway, city streets and rough roads if available. Note the handling, brake response and cabin noise during braking. Comfort is subjective and will only be known if the seats, visibility and driving position are comfortable for you.
Test Technology Features
Take time to get familiar with the infotainment system. Is it easy to use or not? Connect your phone and check the Bluetooth connection. If present, use the navigation system. These are things you will need to use every day and they should work for you.
Bring a Second Set of Eyes
Take a family member or friend with you. They may see things that you don’t, such as reduced rear visibility or challenges when accessing the rear seat. Their point of view may be helpful.
Understand the True Cost of Ownership
The purchase price is just the beginning. The total cost of ownership over five years includes depreciation, insurance, maintenance, repairs, and fuel.
Use Online Calculators
There are some websites that provide total cost of ownership calculators. Enter the models you are looking at and then compare the numbers side by side. It may turn out that the car that you are willing to pay a little more for is going to cost you a little less to own and run over time.
Factor in Warranty Coverage
When you buy your new car, most dealerships will supply you with a factory warranty that will cover bumper to bumper repairs for three years or 36,000 miles, and powertrain for a longer period. Some brands have longer warranties, and you may find that this is beneficial in terms of peace of mind, and of the amount of cash you are spending during the first few years.
Explore Financing Options
The type of financing you choose can affect your total cost, more than you realize. Interest rates are different and the length of the term will influence how much you end up paying in interest, as well as your monthly payment.
Compare Loan Terms
Loans with shorter terms, 36 or 48 months, have higher monthly payments, but lower interest totals. A longer term, such as 72 or 84 months, will reduce monthly payment, but will still mean paying much more in interest over time. Select a term that is both affordable and financially savvy.
Watch for Dealer Promotions
Manufacturers may provide special financing options, particularly for models that are not selling quickly. Zero percent APR offers can be tempting, but usually are offered to consumers who have the best credit. Always read the small print, and know the conditions before you start.
Consider Leasing vs. Buying
Leasing is an option that results in lower monthly payments and can be an opportunity to buying a new car every couple of years, but you don’t build equity. Ownership and no mileage restrictions are the same as buying. Assess your driving style and length of time you intend to own the car to determine which is best for you.
Read the Fine Print on Warranties
Warranties give a peace of mind, but not all warranties are created equal. Knowing what is in it and how long for is crucial.
Bumper to Bumper vs. Powertrain
The bumper to bumper is a basic warranty of the vehicle, but it does not cover any parts that are wearing out, such as tires and brake pads. The powertrain warranty applies to the engine, transmission and drivetrain. Be able to identify the difference and length of each.
Extended Warranties
At the time of sale, dealerships will often try to sell extended warranties. These can account for thousands of dollars! Consider the value of coverage if the car’s reliability is high and the cost is high. It may be better to invest that money in a savings account in case of repairs.
Assess Dealer Reputation
The dealership you choose matters just as much as the car you buy. A reputable dealer will make the process transparent and stress free.
Read Customer Reviews
Check out online reviews on sites such as Google, Yelp and Better Business Bureau. Keep an eye on how the dealership deals with complaints and services. If there is ongoing negative feedback then that should be alarming.
Evaluate Sales Practices
Do they pressure you into decisions? Are they transparent about pricing and fees? A good salesperson will be truthful and allow you to think. If you are uncomfortable with or feeling rushed by any dealer, you should end the meeting.
Negotiate Like a Pro
Negotiation comes as part of the package when buying a car. So many people are intimidated by this step, but with preparation you can do it with confidence.
Do Your Research
Understand the dealer holdback, incentive and invoice price. This information can be found on websites such as Edmunds and Kelley Blue Book. With information, you will be able to recognize what a fair price is.
Focus on the Out the Door Price
Do not negotiate with a monthly payment basis. Dealers can get the better of the payment by lengthening the loan duration. Discuss the overall ‘at the door’ cost, including all taxes and fees. This allows you to have control over the actual cost.
Be Willing to Walk Away
Your greatest leverage is your ability to leave. If you don’t like the deal, thank the salesperson and leave. They will most likely call you back with a better offer more often than not.
Consider End of Year and Model Year Clearance
Price can vary according to when you buy. Certain times in the year, dealerships may be more inclined to get rid of their stock.
End of Year Sales
December is a time of year when lots of deals are offered because dealers are trying to reach their yearly sales objectives. During this time, it is possible to get better prices.
Model Year Clearance
Dealers provide discounts on the previous year’s car when the new model year is approaching. These cars are brand new, but in fact they are one year old. You’ll save a lot of money and you will be buying a new car with a full guarantee.
Review Ownership Reviews and Forums
Owner forums and review sites offer unfiltered insights that you will not find in official marketing materials.
Learn from Real Experiences
Owners share their honest experiences, both positive and negative. It is possible to find out about common problems, quirks and how the car functions in a real life environment. This information is essential in making an informed decision.
Identify Recurring Problems
If multiple owners report the same problem, such as a faulty transmission or a finicky infotainment system, take that seriously. It is likely a design flaw rather than a random occurrence.
Plan for the Long Term
Think about where you will be in five years. Will your family grow? Will your commute change? Buying a car that fits your life today but not tomorrow can lead to an early trade in, which is financially inefficient.
Anticipate Life Changes
If you’re planning on having kids, you should think about a vehicle that has a lot of seating room in the back and is easy to install a car seat. If you think you’re going to relocate to a city, a smaller car may be better. By planning ahead, you will avoid outgrowing your car too soon.
Consider Future Resale
Although you might be keeping the car for the long term, you never know what can happen. If you should need to sell the vehicle earlier than anticipated, you will save money by selecting one that has a high resale value.
Conclusion
This is an exciting process to buying a new car; it is also demanding and requires thought and preparation. The things to consider before buying a new car go far beyond the sticker price. Whether it’s budgeting, research, test drives or negotiations, each step is part of a process that will lead you to making a decision you will be content with for years.
Take your time. Never rush a salesperson. Please follow your gut feelings and the information you have collected. Upon leaving the lot, you should feel assured that you’ve made a sound, informed decision. You will be rewarded with a grateful you in the future for your efforts today.
