Your current car might get you from Point A to Point B, but it doesn’t have the allure of a shiny new pair of wheels. Your decision to upgrade might be fuelled by pure emotion, but think logically when you’re making the transaction. Keep these tips in mind when upgrading or trading in your vehicle to ensure you get the best deal.
1. Research Financing First
Many people appreciate the convenience of on-site dealership financing, but this isn’t always the best option. Many dealers have partnerships with specific banks which may not benefit you, the customer. These finance firms may have higher interest rates or shorter repayment periods than you’d prefer.
Instead, search for your own financing before you enter the dealer. Consider your own financial institution and compare online personal loan rates. Doing your homework early helps you choose the best financing plan for your needs. It also means you can consider buying privately.
Some dishonest dealers might insist you use their financing for your purchase, but this is simply untrue.
2. Consider Going Private
Dealerships are convenient, but they’re not always the best option for buying a new car or offloading an existing vehicle. Dealers are typically more expensive, but they offer warranties and convenient trade-ins and financing. You need to know a bit more about cars to suss out whether a private sale is a bargain or a lemon, but avoiding dealerships can help you find a great deal.
When it comes to trade-ins, it pays to know the market. If your car is in demand, you’ll probably get a better price from a private seller. Check out the KBB cars for sale to help you assess what people in your area are willing to pay for your vehicle and how quickly cars are moving. If the market is slow, it may be worth taking a lower price at the dealer to get it off your hands.
3. Know What Your Car is Worth
Knowing what your car is worth will ensure you get a fair price. Consult the Kelley Blue Book to learn what your particular car in its current condition is worth.
This is particularly important if you’re selling a car with a lien, such as when you have existing financing on the vehicle. It’s easiest to sell these vehicles to dealerships, as they’ll take care of all the paperwork. However, they may try to undercut the price. Knowing a fair price will ensure the dealer doesn’t undersell you.
4. Continue to Negotiate
We all know to negotiate the purchase price of our new car, but most of us don’t think to negotiate anything else. However, you should be negotiating your trade-in price and your finance interest rate too. Here’s where the research you’ve done comes in handy. When you’re clued in, dealers know they have to be competitive to get your business. Financial institutions will also have some wiggle room regarding interest rates.
Don’t underestimate the financial gain of shaving off just one percentage point from your loan. It might sound small, but it could save you hundreds or even more over your finance period.
5. Think Carefully About the Extended Warranty
Car dealerships are in the business of making money, and they can be pretty persuasive when they’re doing it. Buyers may feel pressure to purchase extended warranties or insurance, but you should think carefully about whether you want this additional coverage and how you’ll pay for it.
If you’re knowledgeable about cars, you may feel confident making most repairs your vehicle will need. In this case, the extended warranty might be wasted money. If you do want this extra peace of mind, consider carefully how you’ll pay for it. There are two options: pay for it upfront or add it to your loan. The first option is cheaper in the long run, as it won’t accrue interest, but may not be feasible for someone with tight finances. Including the extended warranty with your loan will increase your repayments, but you may feel it’s a price worth paying.
Keeping these tips in mind will help you make financially-savvy decisions so you can really enjoy your brand new set of wheels.