What You Should Know Before You Decide to Buy a New Car

Most car buyers are not auto experts, and often make mistakes when determining which type of vehicle is most suitable for them, in regards with size, performance, and fuel consumption. Also, car financing is pretty complicated, and you need to do your research about different financing options, so that you don't end up buying a car that doesn't fit your budget. Considering that next to buying a home, buying a car is the most expensive purchase people make, you have to think about what payment method is best for you, what the best time to buy a new car is, how to avoid hidden fees, and how to get the dealer to drop the price of the car you are interested in.
What You Should Know Before You Decide to Buy a New Car
Image Credit: NRMA New Cars

Figure Out What You Can Afford
Before you decide which car to buy, you have to try and figure out how much you can afford to spend on it, based on your monthly income. Finance experts recommend that you don't spend more than 20 percent of your income on a car, taking all expenses into account, such as insurance, maintenance, and gasoline, on top of the monthly payments. You should do a detailed research on a specific car you like, see if your budget can support that price tag, check its fuel economy, so you can roughly calculate your fuel costs, and check your credit score.

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Choose the Right Time
Your chances of getting a good deal on a new car may depend greatly on what time of year or what time of month you go to a dealership. Usually, dealers offer discounts at the end of each month, since they get their bonuses based on how many vehicles they sell over the course of a month. Also, you should be able to strike a deal a couple of weeks before New Year, as dealerships usually don't sell a lot of cars this time of year, with consumers mainly focused on holiday shopping, looking to buy presents for their friends and family.

Compare the MSRP and the Invoice Price
There is a difference between the manufacturer's suggested retail price (MSRP) and the dealer's price. Dealerships usually ask at least a few hundred dollars more than the MSRP, but some ask as much as $2,000 - $3,000 more. That's why you should find out the MSRP, and try to get the dealer to bring the price as closer as possible to it.

Avoid Hidden Fees
Almost all dealers try to get as much money from car buyers as possible by charging extra fees that you don't actually have to pay. These include the dealer preparation fee, the delivery fee, the advertising fee, and the extended warranty, which can raise a car's price by as much as $1,000.

SEE ALSO: Is Your Car Safe? 6 Car Safety Myths Debunked

Find Out The Trade-in Value Of Your Old Car
If you intend to trade your old car in when buying a new one, you should make sure you know exactly what it's worth, so that you can use that information as a bargaining chip when negotiating with the dealer. There are lots of websites that determine the estimated value for your trade-in, that give you the minimum and the maximum amount you can realistically expect for your used car, so you will know how much you should ask for it.

If you have any questions and suggestions, just share it with us in the comments below.
Jordan Perch
About the Author:

List made by Jordan Perch, automotive fanatic and “car sales” specialist. He is a regular contributor to a collaborative community for US drivers.

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