7 Tips for Buying a Car

7 tips for car buying nirvana. It’s execution time!

I’ve been asked by so many readers, friends and fellow financial gurus to write about my car buying experiences.  There are a gazillion excellent articles on this topic, but we are approaching the time of year when the 2015s are coming out and the 2014s are on sale.  It’s execution time!  How about a refresher?

My track record with buying a car has been blessed.  I am amazed at how easy it can be to influence salespeople, even when it’s their job to influence you!  The internet makes it all possible.

Here are some of Paula Cashflow’s favorite car buying tips:

    1. Use the dealership to “test drive” the car only.  Go in, test drive, and then leave immediately!!
    2. Use Truecar.com for determining your price points.
    3. Know the competition.  For example, I wanted a Toyota.  Kia and Hyundai are Toyota’s biggest competition for my chosen model.  Let the dealership know you’re also test driving the competition.  Dealers know their models’ competition.
    4. Purchase at the end of the month.  Remember that sales people have monthly quotas to meet and are more likely to wheel and deal near the end of the month.
    5. Limit your “skin in the game”.  Put as little cash down as possible.  Your trade-in could be sufficient.  I’m not a fan of paying cash for a vehicle.  In today’s low interest rate environments, I usually get dealer or bank financing (simple-interest only loans).  Avoid loans that are front-end loaded for prepayment penalties.  These were popular back in the 80’s and 90’s.  Compare dealer financing to your own bank’s auto loan rates.  Don’t finance for more than four years.  Any longer and you could be underwater, owing more than the current value of the car.  My current auto loan is at zero percent interest.
    6. Put dealer against dealer for your final chosen model.  When combined with the Truecar.com pricing model, you improve your chances of paying a more competitive price.
    7. Calculate your own monthly payment.  This step is important because they’re going to try and sell you 10 different warranty plans and confuse you with various payment amounts.

Here is what happened during my recent experience after following the above tips.

I didn’t want any bells and whistles on my car.  They stated that they didn’t have any stripped down models in stock.  I suggested that they special-order the car.  I was in no rush.  Because they wanted to close the deal that day, I got the bells and whistles model for the NO bells and whistles price.  By the way, those bells and whistles really don’t cost the dealerships much.  The dealership was also offering zero percent financing.  They tried to renege on the zero percent interest after I got the car for below cost.  Since this was a telephone conversation, I declined the offer.  I needed both my price and the zero percent interest financing.

Resist when they ask you to come in to finish the negotiation.  Don’t go!  Do it all by phone.  When they finally agreed to give me my price and zero percent financing, I asked them to have the vehicle parked out front so I could inspect the vehicle before I signed on the dotted line.  The dealership obliged on all accounts.

I actually believe that dealerships do want to deal with informed and sophisticated buyers.  This is the third vehicle I’ve bought from this dealership.  They knew that.  It’s a long-term relationship.  And will probably continue to be.

When you make informed and thorough buying decisions on your car purchases, you take ownership of your own financial freedom!

After all, it’s about life and how you live it.  Cha ching!!

In the spirit of financial well-being,

Paula Cashflow

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