It’s that time of year again! It’s time for March Madness, where we all fill out our office NCAA basketball brackets and then curse the No. 5 seed for losing to the No. 12 seed (even though we hadn’t even heard of either school two days earlier).
Near the end of the NCAA basketball tournament comes the Final Four, when the top four teams battle it out to see who goes to the national championship. Since the closest we now come to playing sports is tug-of-war with the family dog, we’ve decided to create a “final four” of our own: the last four steps for buying a car. These should be the very last things you do before signing the papers, after you’ve already taken all the test drives and narrowed down your shopping list to just one specific car.
Secure Your Financing
After you’ve narrowed down your choices — but before you’ve negotiated a deal on the car you choose — we strongly suggest that you get pre-approved for a loan on your own. The dealer may very well have the best financing deal, so give them a chance to beat it. New car dealerships especially have access to a broad range of financing options including both published and unpublished incentives or discounts. Still, you should know your credit score and know that your credit score will positively or negatively impact your interest rate no matter where you get your loan. The great deals you see advertised on TV are for buyers with excellent credit — it even says so in the fine print. We can’t stress enough that you shouldn’t just assume that the dealer or the bank will have the best interest rate for you — take the time to explore all of your options.
Too many car shoppers just take the very first financing offer they get — and they end up paying out hundreds of dollars more over the course of a loan because of it. Remember, the dealer is in business to make money selling cars, but they also want to keep you reasonably happy so you’ll tell others about your positive experience.
Take a Second Test Drive
Now that you’re sure what car to buy, it’s time to be doubly sure. After you’ve secured your financing (but before you sign the papers and seal the deal), you should take a second test drive. While a salesperson may balk at allowing you this time to “reconsider” your purchase, you should stress that it’s important to you. You’ll want to make sure that this really is the car you want and that you aren’t making a mistake. Also, this test drive isn’t in a dealer demo or a car “just like the one you want.” Driving the exact car you plan to buy can help avoid issues later.
While you’re on the second test drive, you should try to picture yourself actually using the car as you would if it were yours. While a first test drive is often exploratory (“How does the radio work?” and “What does this button do?”), the second one should involve familiarizing yourself with the car. You may even want to bring the car to places you usually drive to see how it handles that annoying bump in your neighborhood or your local grocery store parking lot, for instance.
Know Your Price and Stick to It
Once you’ve secured your financing and decided on the car you want to buy, it’s time for the negotiation. Our suggestion is to know your budget and stick to it. If you want to buy a car for a certain price, but the seller isn’t willing to lower the price, you may have to consider a less expensive car or just walk away from that particular deal.
The negotiation shouldn’t be the time to start thinking about upgrading to a nicer model or adding more options. However, you should also be a little flexible. An extra $500 for desirable features might help you get more for your car or truck when you go to trade it in or sell it in the future. Don’t make this decision based on an emotional response, but simply on what you can and cannot afford. Unless you’re interested in an ultra-rare model or it happens to be the first year of an all-new car, there are likely many more cars available from many more dealers or private sellers.
Beware of Upcharges and Extras
As you sign the paperwork, consider our last piece of advice: After you’ve successfully agreed upon a price for the car, remember that there will likely be some add-ons you may or may not want. In most dealerships, your last stop is usually the Finance and Insurance office. This person can help with things like temporary insurance if your current policy won’t totally cover your new car. However, this is also a sales position, and just like the factory-installed, mechanical features of a new car, you should budget for these items as well, if they’re things you want or need. These additional, non-mechanical items include extended warranties, tire protection, VIN etching and fabric guard. Like the price of the car, the cost of these items is likely negotiable too.
If you live in an area with high vehicle theft, VIN etching can help discourage thieves since the vehicle’s ID number is etched onto parts such as the windows, making it easier for the police to track those items. Extended warranties can usually be added later; fabric or leather protection can usually be purchased later at an auto parts store. The point is to know how much these features will cost ahead of time so you can budget for them and avoid surprises. Go into the dealership knowing whether or not you want these features, and you’ll likely be happier with your purchase in the long run.
Editor’s Note: Revised to include more information about the role of your credit score and dealership services.