Buying from Dealership: Everything You Need to Know

Buying a new car is one of the most exciting experiences in one's life. However, with the average price of a new car close to $48,000, purchasing a vehicle can be expensive and overwhelming. It's also a little stressful to figure out whether the car you set your heart on is worth the amount you'll be paying for it.

At its core, buying a vehicle is a business transaction and one of the final purchasing experiences that requires customers to negotiate. The more you keep emotions out of it, the better the final results. Your best path to a smooth car-buying experience is to understand the purchasing process and how to navigate it. Here's how to buy a car from a dealership without getting over your head in debt or paying more than you should.

Research vehicles and features

Information is the best friend of a car buyer, whether novice or experienced. Luckily, sites like U.S. News Best Cars and Edmunds give more information about the price of every car, features, and available options. You can also explore professionals' and owners' reviews, new car deals, or safety and reliability ratings.

The Internet is another great source of information about the price the dealership is asking for a car and the value of any trade-in you have. Use these tools, and you will have an easier time choosing the right car or truck. You might need to plan for a long search if you are looking to buy an electric car.

Determine your budget

Before you begin shopping for a car, it's essential to know how much you can pay upfront and how much you can afford every month. When you don't know these two figures, it's easy to get into purchase blind, and you might end up with an expensive car than you can afford.

Figure out more than just the price of the car in your purchasing equation. Insurance, fuel, and maintenance costs can quickly add up, so ensure you factor them into your budget. It's also common for the dealerships to charge documentation fees and other dealer charges. Fees and taxes like sales tax are likely to be rolled into your auto loan if you are financing the car.

Check your credit report

Unless you are paying for the vehicle in cash, it's crucial to review your credit report before you begin the car shopping process. The lender will check your credit report and score when you apply for financing. Therefore, knowing your credit report status can help you get the best financing offers available. Fortunately, you can get a free credit report every year from the three major reporting agencies: TransUnion, Experian, and Equifax.

Cashbacks and new car financing deals are usually offered to buyers with healthy credit. Therefore, take time to correct any errors in your credit report and fix defects to get the best deal possible. With good credit scores, you are more likely to get lower interest rates and attractive loan terms.

Get preapproved for an auto loan

One of the most essential steps in the car-buying process is to get preapproved for an auto loan. Getting preapproved for a car loan helps you start on the right foot. You get a good idea of how much you can afford, and you will have an interest rate that you can compare to the dealership's financing.

Getting pre-approved also reveals any issues with your credit. You might need to improve your credit score or remove incorrect information from your credit report.

You can get approved for a car loan from a bank, credit union, or an online lender like myAutoloan. Aim to get preapproved from at least 2 to 3 lenders to ensure you get the best interest rate.

Remember, while it's good to compare offers, you don't want to apply for too many preapprovals in a short period. Doing so may lead to multiple lenders requesting your credit report around the same time, resulting in a hard credit inquiry. Financial experts recommend you submit all your preapproval applications within a 14-day timeframe.

Shop at multiple dealerships

Just like any other purchase, it's imperative to do comparison shopping before you lay down your hard-earned money. Letting the dealership know it has competition can work to your advantage and make it work a little harder to earn your business.

Research different dealerships by visiting their websites and reading customer reviews to see what experience they have had. Look out for a dealership with positive reviews and high customer satisfaction ratings. You can also ask family, friends, or co-workers for recommendations. These people can direct you to a dealership or salesperson that offers excellent customer service.

Arrange your trade-in

You might need to skip this step if you don't have a trade-in. However, if you do, be sure to get the current trade-in value of your vehicle before you visit the dealership. This will help you set the expectations for what your car is worth and give you a reference point for any offers you will get.

Use the Edmunds or Kelley Blue Book appraisal tool to determine the value of your trade-in. The trade-in value is what the dealer might offer you, so ensure you note that figure when visiting the dealership. Be ready to decline offers or pressure to discuss the deal until you have settled the price of the new car.

Test drive and inspect the car

You should test drive the vehicle you are considering before you decide to buy it. A good test drive can help you assess the comfort and performance of different car options.

Aim to drive the specific car that you are planning to buy, not just one that is similar. Keep in mind that not every car coming from the manufacturer is perfect. A test drive and a thorough car inspection can help you identify issues at the dealership before they become a big problem in your garage.

If you are buying a used car, it's essential to acquire a copy of the vehicle's history. This will allow you to check for accidents, maintenance records, and details of the previous owner.

Be aware of add-ons

Add-ons are optional products and services offered by the dealership, such as gap insurance, rustproofing, and Vehicle Identification Number (VIN) etching. These can cost thousands of dollars and are often mentioned at the end of an already daunting and time-consuming day at the dealership.

Dealers may also include these and other add-ons in your deal without even discussing them with you or without your knowledge or approval. However, you can buy the car you want without any add-ons or purchase necessary add-ons from an independent retailer.

Be sure to ask how much you will pay for each add-on and what you will get if you buy these products and services from the dealership. Most importantly, ensure you get everything in writing to avoid any disappointments in the future.

Negotiate with the salesperson

Shopping for a vehicle in the current market can be a bit tricky, especially for first-time car buyers. However, depending on your location, you can still negotiate with the salesperson and ensure you get the best price for a new or used car.

Be firm regarding your budget and stick to your ground. Quote a figure that is lower if the salesperson asks for a very high price. That way, you can eventually settle somewhere near your target price. You should also ensure you are comfortable with the monthly payments.

Close the deal

Once you are confident you have negotiated a good deal on your car, it's time to go through the details. Carefully read any purchase details before you sign the contract. If you are trading in your car as part of your new purchase, look over those details as well. Ensure the dealer pays you what you agreed for your previous car and that the money is enough to cover the cost of the current loan you owe on that vehicle.

The dealer might also require certain documents from you to finalize the sale of your new car. Here are a few documents you should bring during the car-buying process.

• Proof of car insurance
• Driver's license
• Financing documents (if applicable)
• Government identification
• Title and registration for your trade-in
• Proof of residence, such as a recent utility bill

Take delivery

In most cases, you can drive your new car home from the dealership on the same day of purchase. However, you might need to arrange the pickup or delivery of your vehicle at a later date. Whatever the case, the dealership should give you a clean car and a full tank of gas.

Most dealerships will also handle the process of registering your car and acquiring the license plate on your behalf. Nevertheless, depending on your state, you might need to pay property tax before the dealer can complete the process for you.

Final thought

Buying a car from a dealership can be a significant financial commitment, but it doesn't have to be a daunting task. Follow these simple steps, and you will be on your path to finding the right car at an affordable price. Once the deal is done, you could be in better shape financially and even emotionally.