Purchasing a car feels daunting, whether it’s your first or your tenth. Between the pressure from car sales reps and the thought of taking on more debt, purchasing a car is a big deal. So, do you just take a deep breath and hope you have a good purchase? Of course not.
As with most big decisions, take the time to plan first. According to Dave Ramsey, there are many tips to consider before purchasing your next car. We’ve also included additional tips that build upon Dave Ramsey’s advice to ensure your next car purchase goes as smoothly as possible.
1. Define Your Budget
Most would agree that knowing what you can afford is the first step to making any purchase. Car payments will generally run you a few hundred dollars a month, so it’s important to be honest with yourself about your finances.
Consider all your monthly expenses, what you have saved for a down payment, and what you can comfortably pay each month for a car. Ensure that you leave enough room to save money monthly.
2. Get Approved for Financing
Unless you have enough cash to spend on a car, you will have to take out a bank loan. The less money you need, the easier it will be to get approved. Plus, you’ll be immune to large interest rates. Despite rates being close to 7% in the middle of 2024, you’ll have less money to pay off.
Most loans are spread out over a few years. Your goal is to pay them off as soon as possible. By getting pre-approved for a loan, you’ll ensure you don’t go over your budget.
3. Buy at the Right Time
It’s hard to perfectly time the purchase of your car, especially if you urgently need one. However, if you’re shopping ahead of time, you might as well shop at peak times for sales. This way, you’re more prone to score a better deal versus at a time when dealerships have more leverage. If you miss a peak time, don’t worry. There are multiple periods throughout the year when you can save big on your next car purchase.
4. Choose Your Car
After you’ve taken the time to define your budget, you now know what you can afford. Do light research to know which car models fall within your budget. Aim to narrow your list down to three or fewer models.
If you find a few models that are off your budget by just a few hundred dollars, you can still include them. However, exclude models that are thousands of dollars off-budget. Your budget is meant to protect you so you don’t take on too much debt.
5. Figure Out the Best Price
After you’ve found the best car models within your budget, you’ll need to research the best price. Whether buying a new or used car, figure out what price dealerships around your area are offering it for. At the end of your research, you should confidently know a fair price for your car model and the most you’re willing to pay.
6. Get Insurance Quotes
Nowadays, large insurance companies allow you to get real-time quotes without having to call. Simply enter all the requested info and watch a quote populate in minutes. This process will be easier if you’ve narrowed down your list to one car model. Otherwise, although tedious, it’s important to get quotes for all the car models you’re interested in purchasing. You may even drop a car off your list if insuring it costs too much.
7. Bring Someone With You
Ideally, you want to bring someone who’s good at negotiating or has experience dealing with car salespeople. However, anyone is better than no one. If you end up going alone and have little to no experience negotiating prices, you may be more easily influenced to purchase an overpriced vehicle. Avoid the risk and invite a friend or family member.
8. Test Drive
Test driving a car is a logical step to get a real-life feel for how it will handle on the road. Per Dave Ramsey, “Choose a route that allows you to experience different types of driving.” This lets you get a feel for how your new car will handle your day-to-day driving.
Avoid test-driving vehicles not on your list. No matter how good a deal you’re presented with, your entire plan is at risk of being jeopardized. For example, you may pay higher insurance fees or incur hidden upcharges.
9. Get the Car Inspected
If you’re purchasing a used car, ask local dealerships if they’ll inspect it for you. Certified used vehicles often have been inspected and include a warranty. However, if you’re purchasing a non-certified vehicle, it’s common for dealerships to offer free inspections within their department.
You should also perform your own inspection. Even if you’re not mechanically inclined, you can visually note the condition of a vehicle. Additionally, if you see any basic features missing, be sure to let your salesperson know.
10. Check Vehicle History
Aside from passing inspection, it’s important you understand how your vehicle was maintained. Just because a car has no problems today doesn’t mean it won’t have issues in the near future. Many problems occur naturally, but others arise due to improper maintenance. Ask for a vehicle’s Carfax and note how often oil changes were performed, among other common maintenance tasks.
11. Avoid Fancy Upgrades
Step into a dealership with tunnel vision. You’ll often be presented with extra features for the car you’re looking for. Dave Ramsey recommends not to “get trapped into paying for things you don’t need.” Remember, you worked hard to do your research and crunch the numbers beforehand. The only changes you should be open to are savings.
12. Consider Total Costs
It’s common to shop around for a vehicle and see a price thousands of dollars past its sticker value. Additional charges may include interest, extra features, and insurance, among other things. However, before you sit down to sign anything, be sure you understand your total costs. There shouldn’t be too much of a difference between your initial research and what you’re presented at a dealership.
13. Review the Contract Carefully
Hopefully, by the time you’re reviewing your contract, you’re happy with the numbers. However, your job is not done yet. Read over the contract and be sure to ask for a revision for any promises made by salespeople.
On the day of, they may promise you free oil changes and car washes for two years, only to switch it up later on. If a salesperson is offering you additional perks, odds are they are being truthful, but if it’s not written in the contract, it’s hard to fight for these perks in the future.
14. Negotiate
If you’re not completely happy with the price or terms, negotiate. You’ve already done your research and shouldn’t feel obligated to pay for a vehicle outside your budget. The worst you can hear is “no” for a feature you want. However, if you try to negotiate after you’ve signed the contract, it will be more challenging.
15. Avoid Impulse Buying
Forget about the sunk-cost fallacy, in which you lack the ability to let go of something after you’ve invested a lot of time. You can bet salespeople know this and will do what they can to make you more invested in the purchase. Whether making you wait for a long time or offering limited deals, do your best to avoid purchasing because of these tactics.
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