How Can People Buy New Cars to Reduce Trouble?

Today, the average price of new cars is about tens of thousands of dollars, excluding taxes, insurance, and other expenses. Although it's boring to talk about budgets, you really need to do this before you start shopping. Most people overestimate how many cars they can afford, which leads to disturbingly high payments. Buying a new car should be a pleasant experience, not a financial concern.

If possible, you should pay cash to avoid paying interest but don't let dealers know, because they prefer financing buyers. People who need auto loans should follow the following guidelines:

The monthly payment shall not exceed 15% of the after-tax salary

Limit auto loans to 48 months

The down payment shall be at least 20% of the purchase price

If you can't meet these budget goals, you really need to consider buying a cheaper car. Try to look at a used car, or save a few months to pay the more down payment. When budgeting for a car, safety is better than regret.

To many people's surprise, the price of a car does not necessarily determine its price. If you buy expensive new cars that depreciate slowly, it may cost less in the long run than if you buy a cheap car that depreciates rapidly.

Depreciation accounts for the majority of vehicle costs, so you need to pay close attention to this. If you buy a car for $30000, you have an asset that is depreciating. You can sell your car at any time and get some money back, but depreciation is your actual cost, that is, the money you will never get back. Among them, luxury cars have the fastest price reduction. If you want a luxury car, buy a slightly older one, which can save thousands of dollars in depreciation.

A flexible choice of vehicles allows you to buy the most cost-effective things. Many shoppers only focus on a certain model and even refuse to test drive competitors, which is a huge mistake. One of the best suggestions I can give you is to test drive as many competitors as possible. I promise you'll be surprised at the results. You never thought you would like a car. Once you drive a car, it will suddenly become attractive, while other cars you think are great will turn out to be boring.

Don't just believe the comments you find on the Internet. Everyone has their own views on cars. Most car websites and magazines are for car enthusiasts, who are more interested in car performance than daily driving and reliability.

A new car purchase strategy

How do you negotiate the best deal possible? The answer may surprise you: don't negotiate. Yes, it sounds counterintuitive, but to buy the most cost-effective new car, all you need to do is follow some simple instructions.

Most car buyers do everything in the wrong way. They think it's right to negotiate face-to-face with the car salesperson, but don't get involved in the dealer during the negotiation. Instead, pricing can only be done by phone or email.

See Bruce Bueno de Mesquita's short video, the author of the predictor's game, about the best way to minimize the price of a new car. I like him to summarize the process simply and understandably.

That's all it is. This is a question of following instructions and collecting prices, not actual negotiations.

Other negotiation skills: negotiate everything separately. Dealers like to combine your old for new and new car prices, which will cause price confusion and make it difficult to compare transactions. The same is true for additional services such as financing or extended warranty. Shop around and find the most cost-effective deal. Never negotiate based on monthly offers.

New car prices and expenses

Some car buyers have no clue at all. They didn't know that the price of the new car was negotiable. Obviously, car dealers like them very much, but it also raises a good question: how much room for the price?

In fact, the price of most new cars is 5% to 15% lower than the recommended retail price, but I have also seen that after considering the incentives, the discount of the remaining models is as high as 35%. There is also high demand for some cars, which eventually sell at a price higher than the recommended retail price (but this usually lasts only a few months at most).

Purchase time

Do you know that choosing the right time to buy a car can save money? Dealers and salespeople will be under pressure to sell more vehicles in specific periods, so seizing them in these periods will give you the greatest negotiating advantage.

For example, each dealer has a monthly sales target. Manufacturers often offer bonuses to dealers for each car that exceeds a certain threshold. In the last few days of each month, the pressure to meet the quota comes. Therefore, the last few days of each month are a great opportunity to buy a car.

It is said that the best time of the year is the week between Christmas and the new year. Most people don't buy cars during this period, and every dealer is frantically trying to achieve year-end sales targets and bonuses. Manufacturers often offer the biggest discount before the end of the year to empty all remaining models and increase annual sales.

Legal and clerical work

Interestingly, when it comes to the final paperwork, dealers seem to "make mistakes". Almost all errors occur in a favorable place for dealers. Obviously, these are not mistakes, but a meaningful way for businessmen to steal your money. The only way to protect yourself is to carefully examine the final documents with eagle eyes. Don't be stingy in this regard. Take the time to review all the numbers and don't be afraid to question everything. If you do have a problem - even after signing the document, many dealers will correct the situation when you contact them (but they will treat it as an "error").

If things can't be solved, you do have several options. One of the things dealers fear most is that customers complain to the state attorney general. I hope you don't need to. And in most cases, if the dealer is smart, you don't need to do so.