Buying a Car This Summer
If you are thinking of buying a new car, this could be your summer of discontent. Buying a new car is a challenging task under normal circumstances -- and this year, circumstances are anything but normal. Due to the Japanese earthquake and subsequent tsunami that occurred in March, supplies of Japanese-built cars are already down, and many could reach precariously low levels in the next few weeks. Further, because so many carmakers rely on Japanese-sourced parts, vehicle supplies around the world are being negatively affected. This situation and the gradual improvement in the economy have persuaded vehicle manufacturers that they don’t need to be quite as generous with consumer incentives -- offering low-interest financing and cheap lease deals, among other perks -- as they have in the past. This means getting a great car deal is getting harder, quite an unusual situation in an economy that is as anemic as the U.S. economy is right now.
The good news is that it is not impossible to get a great deal. The fact is, if you do your homework and stand your ground, you can emerge with a very satisfying car purchase. Here are a few tips that can help:
Don’t fixate on the monthly payment.
Yes, most of us have monthly budgets and consider expenses on a monthly basis, but one quick way dealers can lower your monthly payment is by increasing the length of the loan. If you go there, you almost always end up paying much more in the long run. A salesperson might also try to switch you from a purchase to a lease. There’s nothing wrong with leasing if the lease term is short (three years maximum), but a longer lease is a money pit. You end up paying a lot for a car you have to give back -- a miserable situation for your overall finances.
Do your homework on prices and values.
A car is one of the rare consumer products for which you can quickly and easily find out what the retailer paid for it. Plus, the Internet offers you several websites where you can learn what consumers like you are typically paying for the same car you are considering. That is extremely valuable information to have as you negotiate your purchase. Many of those same websites will also give you a precise idea of what your current car is worth. Again, that information can be invaluable at trade-in time.
Shop hard and be prepared to walk away.
Feel free to walk into a dealership, look at the vehicle you are considering and get information from the salesperson, but feel just as free to walk out that door with no questions asked. Don’t be intimidated into making a deal you don’t feel comfortable with because the salesperson tells you the deal is good “today only.” New vehicles are essentially a commodity. At any given time, thousands are for sale, and factories are churning out more. You’ll find a deal that is as good -- or better -- the next day and the day after that.
Luigi Fraschini is a Driving Today contributing editor who writes frequently about the financial aspects of vehicle purchase and ownership. He’s based in Cleveland.