What To Know When Buying And Selling A Car

Insurance Insight with Jamey South

Americans bought more than 17 million new cars and trucks in 2016. If a new set of wheels is in your future, keep these things in mind throughout the process to find a vehicle that meets your needs.

Before You Buy

  • Make a list of needs and wants.
  • Set a budget. Most experts recommend a ceiling of 25 percent of your monthly income for all cars in your household.
  • Choose between new or used, buying or leasing.
  • Research prices and reviews.
  • Get pre-approved for a loan.
  • Trade-in? Use online tools to help determine its worth.

When You Shop

  • Visit several dealerships.
  • Test-drive, paying attention to handling and sight lines.
  • Ask about financing and incentives.
  • Negotiate the price before mentioning your trade-in.
  • Don’t be afraid to walk away.

Closing The Deal

  • Bring pre-approval documentation and necessary paperwork.
  • Carefully review the purchase contract.

Beware Of These Sales Tactics

Mixed Negotiations

Also known as the “four square” method, this sales tactic combines multiple, unrelated factors into a single transaction. The sales manager writes the price of the car, the down payment, trade-in value and the desired monthly payment into four boxes. If you want a certain trade-in price or a set monthly payment, other numbers may increase to compensate.

Shop your trade-in around multiple dealerships to get an estimate of its true value, and know not to negotiate based on your desired monthly payment.

Inflated Interest Rates

Some car dealerships may advertise a certain interest rate, then make a last-minute change to financing. Secure a car loan through a bank or other outside party and come to the dealership with pre-approval in hand. Know your credit score beforehand so you’re confident about what you can afford, and triple-check all numbers in your paperwork.

Spot Delivery

Some car buyers have driven a car off the lot without securing financing. This means that a few weeks later, the car dealership could call to say the loan application was rejected and that they need new paperwork–with a higher interest rate or down payment. Never sign a deal or drive away in your new car if you don’t see your interest rate written down.

Used Car Buying Tips

Buying a used or “previously owned” car is a great way to save money and still obtain the transportation you need for work, school, and living.

While there are many legitimate reasons for owners to sell or trade in a used car, some cars may have been in crashes and had extensive repairs, been poorly maintained, or have persistent mechanical problems.

Before you purchase a used vehicle, follow these tips to make sure you don’t end up with someone else’s problem:

  • Check maintenance logs. Ask the owner for a record of standard maintenance that has been performed on the vehicle, such as servicing, brake checks, and fluid replacements.
  • Inspect the car yourself for mechanical soundness, or have it inspected by a certified mechanic or auto repair shop. Inspect it for signs of wear and tear, rust, paint gouges, and other red flags.
  • Buy a vehicle report from an independent service such as CARFAX or Consumer Reports to learn about any serious damage the car has sustained, from flooding to bent frames.
  • Shop from a reputable dealership that offers certified pre-owned vehicles. A certified vehicle will come with a warranty, either from the dealer or the manufacturer.
  • Check official guides (NADA, Kelley Blue Book) for pricing on the vehicle you like. Value will vary according to the make and model, age, condition, mileage, and features on the car. You can negotiate with the seller for the best price.
  • Protect yourself against fraud. Before buying, check the vehicle identification number (VIN) to ensure the car hasn’t been reported stolen. Also, look at the VIN tag and registration documentation to be sure they haven’t been tampered with. It’s wise to take extra precautions with any private sellers who want cash only or won’t provide a home address and phone number.