You've saved and scrimped and somehow found yourself with a big wad of car cash smack dab in the middle of a buyer's market. Here's the facts, tips, and secrets you need to know before you slip behind the wheel of your first brand new vehicle.
By Steven Stafford
Buying a car is always a big decision. And by now, you've probably gone through at least one car. And since you're probably not Lil' Bow Wow, your first car was probably used. So, what's the big difference between buying new and buying used? Actually, a whole lot.
When you buy a new car, the decision is much bigger because there is more at risk. You are spending a lot more money on an investment that must last you longer. Remind yourself, I could (and probably should) be driving this car in seven years.
No pressure, but don't screw this one up! Whenever you buy a new car, you lose money: as soon as you drive it off the lot, the car has lost a lot of value, usually by thousands of dollars. It has undergone an ontological change; it is, in the blink of an eye, a used car. So, you have to prepare by educating yourself on certain essentials before you decide.
Remember that these are hard times. But even if we weren't in the middle of Great Depression: the Sequel, the most important and least fun question is, “what can I afford?”. Since you are still not Lil' Bow Wow, you have to use caution right away. Ask yourself, “Do I want to max out my budget?”.
Be aware of hidden costs: a nicer car not only costs more on the sticker price, it costs more in insurance, maintenance, repairs, and is more likely to stress you out, believe it or not. When you calculate these hidden costs, round up, as you always should in contingency planning. Be prepared for a worst-case scenario. To paraphrase Nas, by the time you can afford the flashy car you wouldn't even want it. So, to this question, it is almost always best to say, “no, I do not want to max out my budget if I can avoid doing it, which I almost always can.”
Speaking of hidden prices, you can take into consideration repairs before you buy from a dealer. Sometimes you can get cheaper repairs through the dealership than you could through a regular mechanic. Make a mental note to explore this option whenever you buy a new car. Some foreign car companies, especially German ones, will require you to order parts from them or do repairs through them. This is at least a nuisance and at worst an exploitative monopoly.
Warranties could be an entire article in themselves, but, in general, look at them like insurance, because that's what they are. You wouldn't want to be without insurance, would you? Warranties suck, but it is always good to be cautious when you are investing large amounts of money.
Finding the best price, then, is the name of the game. But how? The simple answer is, as Winston Churchill famously said about Middle East oil, “diversify supply,” or, as Smokey Robinson put it, “shop around.”
Never buy the first time you walk in. Indeed, the current economic disaster is a buyer's market: it is far better to be in your position right now (and for the next few years) than in the salesman's position. How can you use this to your advantage? First, this should give you more haggling power, or, at least more confidence during the haggling process. Second, you can find some bargains that you wouldn't normally be able to find, especially from dealers who have massive mortgages hanging over them. But just because it is a buyer's market doesn't mean that any of the “magic” deals you hear about are any good. If something sounds too good to be true, it probably is.
This brings us to haggling. Nobody really likes doing it. Few are good at it. And you're up for a challenge. New car salesman are harder to haggle with than used car salesmen. Why? They have higher costs. This means there's more room for error and greater potential commission. These guys are good at their job. That means you have to be ready. Make an offer for cost + 5%. But how do you find out their costs? That requires some homework.
A question a lot of people forget to ask is, “Does this car work for where I live?” Sure, Mustangs look good on posters and are great cars if you live in California or Arizona. But if you live in Boston, don't get one: salt will eat it alive. Plus, that thing's just gonna get keyed. Certain parts of the country are harder on vehicles than others; cars in the Southwest live longer than in the Northeast due to the weather.
You might also want to keep in mind, “Is leasing a better option for me?” While this could be an entire article in itself, leasing is relevant to this discussion. Unless you've, for some reason, rational or otherwise, got it in your head to buy a new car, keep the leasing option open.
“How much room do I need?” or, “What am I gonna use this thing for?”. For example, when my dad worked in construction, he drove pickup trucks. Now that he has an office job, he doesn't. That just makes sense. Sure, it's cool on the commercials when they brag about their ability to “haul pig iron” (whatever that even is) but, will you ever need to do that? Probably not. This is one reason why the American auto industry is in on life support. This frailty, you would think, would allow you to capitalize on it and get a good deal. However, this is not the case. It simply means you won't find a good car. If it wouldn't make me feel guilty, I'd just recommend you get an Asian vehicle. But perhaps I digress.
If you do want the room of an SUV, you'll need to ask, “What's the gas mileage on this thing?”. One good thing is that you can sometimes find crossovers between archetypes. And hey, remember all that stuff a few months ago about an automotive bailout? There was a lot of talk about fuel efficiency standards and other technology conditions imposed on American manufacturers. The unfortunate fact is that American companies have not held themselves to the same standards of foreign car makers. Much will probably be changing in the next few years. So, do you really want to buy something that potentially may be out of date (obsolete might be the word) in only a couple of years?
While this checklist is neither exhaustive nor too specific, it should at least help you to organize your thinking about your purchase. There are many ways of evaluating a product: consequently, everyone has to prioritize. Remember that decision-making is a rational faculty; err on the side of pragmatism: what titillates you may not be right for you (just a good general rule in life). The hard part is to convince yourself to want things that are good choices. But now that you have your priorities, the decision-making process should be clearer.
P.S. This seems like an interesting link: How to Tell when a Dealer is Lying.
Steven James Stafford is a magna cum laude graduate of the University of Massachusetts-Amherst, with Bachelors Degrees in English and in Political Science. He resides in the suburbs of Boston.