Here’s How You Can Buy a Car (Now) with Confidence

There might be no better time than now to purchase a car or truck. If you are in need of a new (or used) ride, auto manufacturers are offering tons of incentives, including 0% interest, deferred and extended payments, and huge rebates. The keys (excuse the pun) to scoring one of these deals? An excellent credit score (720 or higher), research, confidence, and holding your ground.

1. Credit Score

Having a great credit score has been an ongoing theme in many of my blogs and for good reason. Good credit will save you thousands over your lifetime in interest costs and fees. If you are able to maintain a credit score of 720 or higher, you will typically qualify for the best interest rate available. Many auto manufacturers are offering 0% on new cars. How much will this save you? A 0% interest rate is the difference between paying $20,000 for a car and $24,332 at 8% over 60 months. That’s over $4,000 that will go towards nothing! Even if you do not qualify for a great interest rate at first, you can spend one year building up your credit and then try to refinance. It is important to keep the loan at the same term or less. Extending the payment timeline defeats the purpose.

2. Research

Would you purchase a home without knowing real estate values in your desired area? Would you pay $6 for a box of cereal if the same one is $4 on the shelf below? Buying a car is no different. They vary in price depending on the seller, features, location, and demand. You should know what you want and what is a fair price. Check on web sites such as truecar.com, which tells you what folks have already paid for the car you want, kbb.com for the fair market purchase price, and autotrader.com for how much similar cars are currently selling. Keep in mind, if you have a trade-in, know the same information just mentioned and negotiate just as you would for your new car. These are separate transactions! Also, what is most important? A good warranty and maintenance plan or 20" rims? I hope you picked the former.

3. Confidence

As with anything, if you lack self confidence or show weakness or nervousness, you are easy prey for a salesperson. His or her goal is to sell you a car or truck at the highest price possible to receive the highest commission. You should be able to speak their language (see Research), ask the right questions, and keep a strong, yet professional, disposition. I am certainly not suggesting attacking or belittling anyone. As a matter of fact, it’s better to be kind and develop a rapport with the person. Crack a few jokes to keep things light and less stressful for everyone. You could easily spend hours at a dealership, so try to have some fun. Who knows, you could score some freebies if the salesperson likes you.

4. Hold Your Ground

It is so easy to fall in love with a new car. You test drive it. Now you can see yourself driving along the Pacific Coast Highway and showing it off to your friends. You are hooked. Unfortunately, this feeling alone could also ruin your chances of being able to “walk away” when something doesn’t feel right. Imagine having a great credit score, doing your research on price, walking in with confidence and then blowing the deal because you were tired of the negotiation and just settled on a price you weren’t prepared to pay. There are other dealerships. This does not have to be your final stop. Shop around! But do so on different days. It can be draining to stop at even one dealership. Also, ensure you are in the mind set to do this. It is one thing to fall in love, but it is another when you are hungry or tired, making it much easier to break down at the end. I speak from experience.

Finally, I will caveat all of this by mentioning you should have a budget and know what you can afford well ahead of starting this process. Having a great credit score, doing your research, buying with confidence, and holding your ground is worthless if you do not have the cash flow needed to support your purchase. Except under very specific circumstances, a vehicle is not an asset. Be realistic and smart about what you need vs. what you want. And if you could use some moral support, ask a good friend or family member to come along. Good luck!