Essential Tips Before Buying a Car

One might rejoice at the idea of purchasing a car due to the convenience that comes along with it. However, if not done properly, it can turn into a nightmare.

In order to ensure that you purchase the car that not only suits your requirements and situation, but is easy on the pocket as well.

See the steps mentioned below to learn about the points you should remember before buying a four-wheeler:

• Fix your budget: The first and foremost step while planning for a car purchase is determining how much you can spend. While you might have your eyes on a particular car, you cannot take it home unless your pocket allows it. According to a thumb rule, the total expenditure on all the cars including expenses on fuel, insurance premiums, maintenance costs, and more, within a household should be 25% of the total monthly income. Therefore, you will have to fix a budget that does not hamper your bills payment, savings, and other regular expenses.
• Choose between new and pre-owned car: Once you have fixed your budget, it is important that you decide whether you want to buy a new car or a pre-owned one. You can weigh all the pros and cons of buying either of the types of cars and prioritise based on your requirement. Then, you can assess if the chosen type of car fits your budget by the calculating the ownership cost of the car.
• Decide the kind of car you want: You should choose a car that best serves your requirement, circumstances, lifestyle, and taste. Make a list of the features and specifications of the car that you want such as seating, comfort, convenience, performance, and safety features. You will also have to decide whether you want to opt for a car with diesel or petrol engine. Based on your budget as well as your preference of old or new car, you will have to narrow it down to a few car makes and models. Next, you can make a list of additional features that you would like to have in your car such as a sunroof, surround sound systems, heated seats, etc.
• Check the resale value of the car: In terms of resale value, some cars might have the upper hand over others due to a powerful engine, better fuel efficiency, and popularity of the manufacturing brand. Furthermore, since car maintenance is one of biggest concerns for buyers, cars which have more service centres and better spare parts availability usually have greater resale values. When you are looking to buy a car, you should check its resale value in case you have to sell it during a financial crisis or just want an upgrade in subsequent time.
• Perform a thorough research: The Manufacturer's Suggested Retail Price (MSRP) is the amount that the dealership pays to the manufacturer for a particular car. This information is useful when you are negotiating the price of the car with dealers. Therefore, make sure that you take a note of the MSRPs and invoice prices of the cars that you have shortlisted from the internet. It is advisable to choose a car that will cost 5% less than your determined monthly budget. This will allow you to cover additional costs pertaining the car. While the prices mentioned on third-party websites might not be accurate, it can help you get a general idea about the actual prices.
• Secure your finances beforehand: One of the biggest mistake that one can make is not looking into financing options before visiting a car dealership. While most of the dealerships provide financing options for their customers to help purchase the car they want or like, the interest rates offered during such circumstances are usually higher than the rates available in the market otherwise. You can check the current interest rates being offered by banks and other non-banking financing companies (NBFCs) in addition to any ongoing offers online. Using a banking portal such as BankBazaar, you can also compare and select the best rates available that best suits your needs and repayment capacity.
• Look for options: Checking the prices from a number of different dealers is a smart move. When you are planning to buy a car, walking out of at least one dealership will help you learn about the lowest cost of a particular car that they can offer. This informations comes handy when you go to another dealership and try to negotiate the price. Additionally, it is also wise to check the prices at a few dealerships out of town since dealership prices vary depending on the location as well.
• Learn about the car through a test drive: Even though you might have researched about the car and its features on the internet, you should take your time with the test drive. Ensure that you like the feel of the car while driving and otherwise. Even when the car is parked, you can experiment with the controls to check whether you and the passengers will be comfortable in it or not. Do not hesitate to ask for additional time to understand if you really like the car. In addition to comfort and features, you should also check the driving convenience, handling, brakes, etc. The car should also offer a quiet and smooth ride.
• Negotiate the prices and terms: Cars are the second greatest assets of an individual, after his or her property holdings. Therefore, you should negotiate the terms and prices as much as possible to get the best deal before you make the investment. Negotiating the price of the car will help you bring the car loan down and can save you money in the long run. You can practice your negotiating skills beforehand and do not feel bad to walk away from any offer. Remember that confidence is the key during such a negotiation.
• Focus on the total price instead of monthly payments: Trying to trick potential buyers into an expensive deal is second nature to salesmen. Do not be tempted to say yes to a low-cost deal with a long tenure since they might end up costing you more eventually. Also, make sure you learn about the total price of the car including all the hidden costs such as dealership costs, delivery charges, taxes, car preparation, and more. Dealerships often don't often tell the customers about these additional charges unless the buyer enquires about them.
• Refrain from mentioning your trade-in: If you are planning to trade-in your old car for a new one, do not mention this until the very end of the buying process. If mentioned earlier, dealerships might use this information against you and offer you a deal after factoring the price of the trade-in car. Therefore, you should negotiate the cost of the car and the trade-in separately to get the best offer.
• Factor the car insurance premiums in the total cost: Insurance costs have a huge impact on the total price of the car, therefore it is important that you consider it along with the car's price during a purchase. While sports cars usually have more expensive insurance premiums than other cars, there are a number of cars which have a high premium amount due to separate reasons. For example, Honda Civic, Toyota Camry, and Honda Accord have a high resale value and, hence, are more prone to theft. Therefore, they might have a higher insurance cost compared to the other cars in the same segment.
• Avoid purchasing any add-on: Since salesmen earn commissions based on a percentage of the sales price, they might try to rope you into purchasing add-ons to increase the cost of the car. Try to keep the additional costs to a minimum by avoiding add-ons such as heated seats, rust proofing, rear camera, VIN etching, and dealership maintenance plan. You can also buy a GPS unit at a much cheaper price online, instead of buying the expensive built-in system.
• Do not buy an extended warranty along with your car: The extended warranties offered by dealers are often expensive and provide minimum coverage. Be it a new or used car, such warranties also do not usually cover mechanical failures. If you are purchasing a new car, make sure that it has a manufacturer's warranty to cover most of the damage costs. In case of a pre-owned car, you can check whether it still has an active manufacturer's warranty. If not, you can save that money instead for potential repair and maintenance expenses.
• Get the pre-owned car checked by a mechanic before purchase: In case you are planning to buy a used car, it is wise to get it thoroughly checked by an expert technician before the purchase is finalised. By doing this, you can not only become aware of the condition of the car, but can also learn about any existing or potential concern as well. According to this report, you can decide whether you want to buy the car or the mechanical issues are too severe. This can also act as leverage while negotiating the price of the car.
• Do not make an impulse buy: Being a huge investment, it is advisable that you do not buy a car just out of impulse. Purchase a car only after performing extensive research on the market so that you don't regret your decision later. If you check all the financing options available as well as the car makes and models in the market, you will be able to buy a car that you can enjoy for many years, without becoming a burden on you.
• Purchase a car while maintaining finances: Buying a car when you are repaying other debts can be a herculean task. If you are already paying off a car loan, the additional loan might impact your monthly income and savings. Therefore, purchasing a car only after the previous car loan is paid off is a better option than buying one while repaying an existing loan. By doing this, you will be able to avoid an upside down car loan.