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Essential Tips for Buying a Car

Buying a car is one of the most significant financial decisions you’ll make. With the right knowledge and strategies, you can make the process more affordable and less stressful. Here’s a comprehensive guide on what to do and what not to do when purchasing a car.

Things You Should Do When Buying a Car

Do Figure Out How Much You Can Afford

New and used cars can be quite expensive. As of August 2023, the average new car cost $48,451, while the average used car cost $26,651. It’s crucial to determine how much you can afford. Use a car payment calculator to see how a monthly car payment fits into your budget. Experts suggest spending no more than 15% of your monthly take-home pay on a new car and no more than 10% on a used or leased car.

Do Improve Your Credit

If you plan to take out a car loan, ensure your credit is in good shape. A higher credit score can help you secure a lower interest rate, reducing your overall cost. Check your credit report and score, and take steps to improve it if necessary, such as paying down credit card debt and correcting any inaccuracies.

Do Get Preapproved for Financing

Seek preapproval for a car loan from a bank or credit union. This gives you a clear idea of your budget before visiting a dealership and helps you avoid potentially higher financing offers from the dealership. Compare interest rates from several lenders to get the best deal.

Do Avoid Lengthy Loan Terms

While longer loan terms can lower your monthly payments, they often come with higher interest rates, making the loan more expensive overall. Aim for shorter loan terms to save money in the long run.

Do Shop Around

Compare prices at multiple dealerships to find the best deal. The best months to shop for car deals are October, November, and December. If that’s not possible, consider shopping at the end of a month when dealerships are eager to meet sales goals.

Do Negotiate the Price

Once you’ve chosen a car, try negotiating for a better deal. You might be able to get free dealer-added features or a lower price. Research the car’s market value and see if competitors offer a better deal to strengthen your negotiating position.

Things You Shouldn’t Do When Buying a Car

Don’t Get Too Emotionally Attached

Be realistic about your budget and avoid getting attached to a car you can’t afford. Focus on your needs rather than wants to make a financially sound decision.

Don’t Fall for a Dealership’s Sales Tricks

Be wary of prolonged negotiations, high-pressure tactics, and being steered towards cars you don’t want. Stay firm on your budget and preferences.

Don’t Buy a More Expensive Car Than You Need

Stick to your budget and avoid being swayed by a salesperson into buying a more expensive car than planned.

Don’t Opt for Expensive Add-Ons

Resist the temptation to purchase costly add-ons like extended warranties or fabric protection, as they can significantly increase the car’s cost.

Don’t Focus Too Much on the Monthly Payment

Consider the annual percentage rate (APR) and loan term in addition to the monthly payment. These factors affect the total cost of the car over time.

Don’t Sign Paperwork You Don’t Entirely Understand

Review all documents carefully before signing. If you have any doubts or questions, don’t hesitate to ask for clarification or walk away from the deal.

How to Prepare Yourself for Buying a Car

Proper preparation can ensure a smooth car-buying experience. Here are some tips:

• Reduce your debt to improve your credit score and secure better loan terms.
• Delay the purchase if your credit needs improvement.
• Familiarize yourself with car-buying terminology to boost your confidence.
• Research the costs of insurance and maintenance for the car you’re considering.
• Review your budget and make necessary adjustments to accommodate the new car.

Getting in the Driver’s Seat for a Car Purchase

Buying a car is a significant investment, often costing tens of thousands of dollars. Set a budget, check your credit score, shop around for loans, and compare prices at various dealerships to make the process smoother. For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you every step of the way!

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