Buying a Car

Experts say that the average price of a new cars sold in the US is more than $20,000. That makes a car the second most expensive purchase after a home. That's why it's vital to know how to make a smart deal.

Before you go out searching for the "perfect vehicle," take time to determine your exact needs and wants. Don't buy more car than you can afford. The excitement of a new car fades quickly but the monthly payments go on and on.

Have your want list and your wish list buttoned up well in advance of stepping foot in the showroom or on the lot. You'll be less likely to impulse buy and more likely to get a better deal. Check publications at a library or bookstore, or on the Internet for new car features and prices and for comparative costs on specific models and options. 

Then, shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms. This will allow you to begin to make the comparisons not only among competing vehicles but also among competing dealerships. Take the time necessary for proper evaluation of both.

Don't forget to test drive the cars that most interest you. Once you know what kind of car you want, decide whether to lease or buy. Leasing is an increasingly popular option, with both advantages and disadvantages. 

When you lease a car, you agree to make monthly payments in exchange for using the vehicle for the term of the lease. At the end of the contract period, you return the car to the dealer. Since you don't own it, you get no trade-in or resale value. However, if you turn the car in early before the end of the lease, you can be in for a steep charge. You may also be charged for excessive mileage or excessive wear and tear. If you decide you want to keep the car, most leases do include an option to buy at the end of the lease for a predetermined price. Generally, however, you may wind up paying more than if you purchased the car in the first place. 

Some of the reasons that people decide to lease are that a down payment may not be required, and monthly lease payments are generally lower than monthly payments when you purchase a car. Leasing allows you to enjoy a new car more often than you otherwise would. And you have the convenience of simply turning in the car at the end of the lease period rather than having to negotiate a trade-in value or sale. 

Whether you lease or buy, you will probably need to obtain financing. If you decide to finance your car, be aware that the financing obtained by the dealer, even if the dealer contacts lenders on your behalf may not be the best deal you can get. Contact lenders directly. Compare the financing they offer with the dealer's financing. Because offers vary, shop around for the best deal, comparing the annual percentage rate (APR) and the length of the loan. When negotiating to finance a car, be wary of focusing only on the monthly payment. The total amount you will pay depends on the price of the car you negotiate, the APR, and the length of the loan.

Discuss the possibility of a trade-in only after you've negotiated the best possible price for your new car and after you've researched the value of your old car. Check the library for reference books or magazines that can tell you how much it is worth. This information may help you get a better price from the dealer. Though it may take longer to sell your car yourself, you generally will get more for it than if you trade it in.