Every time that you buy something, you always wonder if you got the best price for your purchase. We want the best value for our money, and we hate getting ripped off. And if we are careful with our day to day purchases, then we should be doubly careful with big-ticket purchases, like luxury items or appliances. Below, you’ll find our quick guide to buying a car. It will help you get the best deal for your money. Here are a few things to remember when you are buying a car.



Go Online

While it’s unusual to buy a car online, we recommend you spend some time doing online research to be sure you find the right vehicle for you. Is it just for you? Do you need room for the kids? Is your family likely to grow in the coming years? Do you live in the city or the countryside? What’s the most extreme weather you’re likely to face? Do you really need that convertible (the answer is always yes!)? Once you’ve figured out what you need, and what you want, search for the MSRP (Manufacturer Suggested Retail Price), for the vehicle you want to buy. Search through local dealers websites to find out which ones have the car you want, which ones are cheaper and who has special offers and promos on at the moment. You can also check their Facebook/Twitter feeds as their social media accounts will often be updated more regularly than their website. Make a note of the MSRP as you’ll need this later on when you start to negotiate.


What will your monthly repayments be?

Unless you’re planning to buy your car with cash you’ll want to know what the car finance costs will be – the monthly repayments you’ll need to make. There are a lot of simple loan calculators online you can use. As an example, we’ll calculate your monthly repayments on the basis of a $33,000 loan to be repaid over 5 years or 60 months, and an expected interest rate of 3.3%. Plugging these numbers into our calculator, we get a monthly payment of $597.38 and a total repayment of $35,842.80. You’re therefore paying $2,842.80 in interest in return for a loan of $33,000. If you are trading in your old car, the value of this will be deducted from the amount you need to borrow which will obviously mean a lower monthly repayment. Try to remember the MSRP mentioned earlier, plus the estimate you got online.


The car buying process

Most people hate the car buying process. They find the process of interacting with car salesmen stressful and confusing, and this can often get in the way of them finding the best possible deal. Car salesmen are very good at what they do so we always recommend buying from a reputable dealership. A salesperson will be assigned to you, and their first job is to help you identify the right car for your budget and your needs. They should offer you the change to test drive the car, and after this stage, you can start to discuss the price and the smaller details. If you are not satisfied with the pricing, the finance manager will inevitably get involved. This is the stressful part – negotiating the price and repayment schedule.

They want to maximise their profit when selling the car. You want to minimise the price you pay for it. Usually, a middle ground will be found and both parties will be happy but this can take some time and you may need to be prepared to walk away from the negotiations to get what you want. The trick here is to know your limits. Before you go to the dealership, arm yourself with all the relevant information. Know your credit score, know what you want to buy, get online estimates so you know the price range, and be sure you can afford it. Also, consider how much of a down payment you can make – the higher the down payment the better the monthly repayment rates.

Once you’ve decided on the vehicle and color you want, the salespeople will push you towards upgrades. Leather seats, seat warmers, entertainment screens, alloy wheels, and all that jazz. Practice self-control and say no to everything but the absolute necessities. Unless of course, you can afford it. Unless you are a cash buyer these upgrades will increase the amount you will need to borrow and in order to make the monthly payments, you might need to increase the payback period from 5 to 7 years. While this may seem attractive you’ll be paying even more in interest payments so we advise you to remember the maths, your budget, and focus on the monthly repayment figure you can afford.



Once you’ve filled out the paperwork, they will check if you have the credit score suggests you will able to afford the repayments. Based on that, they will prepare a payment scheme for you, at an interest rate that is profitable for them, of course. Based on your credit score, do you think what they’re offering is reasonable? Does it match the research you did online? If the dealer offers you 4% interest for six years, say no. If they offer you 4% interest for 60 months, say no, and thank them for their time. They will most likely offer you a better deal. Playing hardball will demonstrate that you are no pushover and that you know the game. So instead of letting you walk away to another dealership, they will likely offer you a far more attractive interest rate plus full value for the trade in you wanted. The simple act of saying no to them could save you thousands of dollars.

Be thorough, be smart about your purchase, know your limits, and stick to your decision. If you are not happy with the deal you are being offered, then take another day to visit another dealership. As tedious as it seems, taking a few hours or days to buy a car can save you hundreds, or maybe even thousands of dollars in the years you’ll be paying off your car. It’s worth the hassle, so stay smart, and buy the right car with the right deal for you.



Disclaimer: Our service is not intended to be, nor should it be construed as financial advice. We help our readers make informed decisions via impartial information and guides. Where appropriate, we may introduce partner companies who can provide services relating to financial products.