Great Tips for Purchasing a New Vehicle

Follow these helpful tips to help you locate the perfect vehicle. Whether you see yourself driving a luxury vehicle, or an SUV packed full of goodies, these tips can help you find the right deal on your next car.

The first step is to figure out what price range you are looking at. How much do you want to pay a month for a car payment? This will help figure out what price range of a vehicle you should be looking at.

Next, find out your credit score! This is very important. If you know your credit score, you can determine an interest rate pretty close to what the banks will give you. If you go to www.annualcreditreport.com, you can pull all three reports for free one time per year. I like to pull one per every four months; that way I can closely monitor my report. For example, I will pull Equifax in January, Experian in April-May, and I will pull Transunion in September-October. This helps me keep on top of my credit and analyze what rates I will receive. FICO scores range from 300 to 850 points - the higher the score, the better the interest rate you can get, which means, you can get a more expensive car and stay within your payment range.

Once you know your credit score, determine if you have excellent credit. Usually, 715 and up will qualify you for the best rates/incentives from the dealer. An incentive from a dealer can be anything from a cash rebate to a low percentage rate. For a cash rebate, a $20,000 vehicle price with a cash rebate of $4,000 would come out to $16,000 price + Tax, Title and License. That is a huge savings. An example of an APR incentive could be that Ford is advertising 0% financing on all 07 Edge's remaining in stock. That would mean that if the Edge was $22,000 drive-out price financed for five years at six percent, the monthly payment of would be around $550. But if you qualify for the 0% financing, the payment would then be around $480. That is a $70 a month savings you could have each month, just for qualifying for the 0% interest rate. Usually, a great credit score will qualify you for the best rates. Cash rebates are typically offerred to everyone. You can find out about great incentives from the newspaper, internet, or simply by checking with the dealer.

Now that you know what payment you are looking for and you know your credit score, you can see how much car you can afford. You should use a financial calculator to figure out the amount that you can finance to keep you within your desired payment. You can find the financial calculators at your bank's website or just google "financial loan calculator" and you will find one that you can use. Right now, I am seeing that the rates given to people with excellent credit, without incentives is around 5%. Use that as a starting point when you are using the financial calculator. Plug in the 5% rate, your desired pmt, and the length of your loan. Usually, most people prefer a 5-year loan on a car (60 months). In some cases, dealers will extend this to 72 or even 84 months in order to get you to your desired payment. Now you are ready to calculate the amount of car you can afford at a 5% rate. Once you hit calculate, your number will appear, and that is the out the door price you can expect to pay on a vehicle to achieve the payment you are looking for. If you have located an APR incentive from the dealer, plug that in and see what a difference it will make on your payment as well. That is how you find out how much car you will be able to afford.

Now that you have your number, locate the perfect vehicle for you. If you go to www.edmunds.com, you can search for cars in all kinds of price ranges. You can see what types of cars cost $15-20,000, $30-40,000, and even over $100,000. Once you click on your price range, you can locate all vehichles within that range. You can then narrow down your selection to the car of your liking.

You have found the perfect car. Now, where do you want to buy the car? First, I would suggest going to the manufacturer's website and checking to see if there are any incentives/rebates. Then, you can locate which dealers in your are are running those incentives. I would call and speak to an internet sales person to see what price they could give you. This is a better starting point than starting with a salesman right off of the lot. I have found that in my experiences (I have purchased 11 cars up to date) a salesman who approaches me right when I pull up to the dealer expects me to pay sticker price for the vehicle. NEVER PAY STICKER PRICE FOR A VEHICLE! Also, if you are a member at Sam's club or Costco, you are eligible for some dealer perks as well. You are able to work with a salesman from most dealers who will work a deal for you around $100 over the invoice price of a car. That alone can lead to $3000 in savings off of the sticker price in a lot of cases. Now, just because these people give you a number, you still have room to work them down. I recently purchased a 2007 FJ Cruiser for $1500 below the invoice price. Of course, I bought it in 2008 and they were trying to get rid of the 07's so it was easier to haggle with the dealer. When you are talking to the salesman on the phone, make sure to ask what they have on the lot. You want to make sure they have a car you are looking at on their lot so that you don't drive down there for nothing.

Are you ready to drive down to the dealer? When you get there, get out of your car, ask for the person you spoke to on the phone, and definitely make it seem like you don't need the car. You need to sell that you are in the perfect situation right now and if you can get the car at the price you want, then great, and if not, no big deal. This way, the salesman will know that you are not in a bind. If he knows you are in a bind, he knows you will pay whatever price as long as you get your payment, regardless of the cost. If you go in with the attitude that you don't need the car, but it'd be great to have it, then you won't feel like it is necessary to purchase it at a price you are uncomfortable with. Take your test drive and don't seem overly excited about the vehicle. Just act calm and collected. If they know you are excited, they know you will pay the money to have it! When you get back, you can now say "Let's see if you can get me to my number. Now if you can't, please understand that I will not be purchasing this vehicle." Since you already know your credit score, I would wait on letting them run your credit until they agree to a number you are comfortable with. If they run your credit, they will then know what interest rate you will get and will start trying to talk you into extending your term to be at your payments instead of coming down on their number. You want to get the lowest possible price out of that car. Get to a number you like first (remember how much car you can afford from the earlier). If they reach that number, try to talk them into going even lower. That will be an even better situation for you and an even lower payment!

If you are able to come to an agreement on a number, then talk about your trade if you have one. Get quotes from other dealers before trading your car in. I would suggest even going to a local Carmax and getting a quote from them. Depending on the car, I have seen Carmax give an additional $2000-4000 than a dealer would. Be careful though. Some dealers will lower the amount they are willing to give you on your trade in order to lower the price on the car you are trying to buy. They will always try to play with the numbers to get buyers to think they are trying to work with them. That is why I recommend not even talking about the trade until you can come to an agreement on the price. Then, you can decide if it is worth it to trade your car in, sell it privately, or sell it to a different dealer. Keep in mind, Carmax will purchase your car even though you are not purchasing a car from them. Don't keep it a secret from the dealer that Carmax or dealer XYZ has offerred you $X amount on your trade. Sometimes you can use it to your advantage and they will bump up their number quite a bit.

Another way you can do this is: During your phone calls to the dealers, share the info you get from other dealers. Let them know that Dealer XYZ offerred you $20,000 drive out price on your Ford Edge and you will buy from Dealer ABC if they can beat that price. Almost every time, they will beat it. Use the invoice price as a good starting point and work your way down from there. That is how I worked my FJ Cruiser deal. Each time, dealer XYZ beat the price dealer ABC offerred me. In fact, they started throwing in little additions like all weather mats, wheel locks, and a steel exhaust tip. Out of my pocket, those items would have cost me around $200-$300.

Now you are ready to sign your paperwork. Do not hesitate to ask for additional perks. You might be able to get on the preferred parts list, or free rental service for X amount of time. You can even negotiate the price on an extended warranty at this point if you would like to.

These are just some simple tips that might help when searching for your next vehicle. The last thing on your list: ENJOY RIDING AROUND IN YOUR BRAND NEW CAR...and don't be afraid to brag about the awesome deal you got!