THURSDAY, JANUARY 12, 2012
Walk onto a new car lot today and you might be surprised to find that the average suggested retail price for a vehicle is nearly $30,000. That’s a lot to swallow and is difficult for many buyers to afford. But there are things you can do to save yourself money when purchasing a new vehicle.
 Knowing that new vehicles depreciate approximately 20 percent during the first year and up to 35 percent by five years, buyers should consider buying a used car that is two or three years old. They save themselves that depreciation rate and still have a nearly new vehicle.
- Before you step foot onto the car lot, do some shopping online. Find out what vehicles on the market suit your needs; consider lower priced alternatives to some of the more popular models. Once you narrow down your choices, educate yourself with that model’s invoice price – the price the dealer paid for the car. This information is available at websites such as Edmunds.com, cars.com and CarsDirect.com. By comparing the invoice price to the car's sticker price (MSRP), on the lot you can see just how much room there is to negotiate.
- Always negotiate based on the price of the vehicle and the interest rate, not by the monthly payment. By extending the length of the loan, monthly payments can be manipulated to meet whatever the customer wants, but you may not realize the increased interest payments and you may even be over-charged for extras and special fees.
- Auto websites can also give provide information about cash-back rebates and manufacturer-to-dealer incentives, which are often passed along to buyers if you know what is available for you to negotiate with. Also, be wary of extended warranty programs. Many of these packages overlap the original manufacturer warranty and have terms that void the contract and do not offer a good value for the money.
- Shop around for financing before shopping for your car. Your local bank or credit union can regularly offer customers a better rate than a dealership can. Find out what your credit score is before you go shopping (you can get a free copy of your credit report each year). This information can help you negotiate a better interest rate on your car loan and also lets you know if you qualify for special advertized offers. Only those with a credit score about 720 will qualify for those zero percent loans. The lower your credit score, the higher your loan’s interest rate will be. If your credit score is sagging, consider putting off your new car purchase until you can pump up your score.
- Getting the most from your current car can help you put more money toward your new car. So, should you trade your car in at the dealership or sell it yourself? Car dealerships take into account the cost of advertising and fixing up your car to resell it when considering what to offer you in a trade-in allowance. But with a little effort of your own, you can often sell your car through local online auctions or car trade papers for more than the value of the trade-in. Used car values are readily available at Edmunds.com or Kelley Blue Book.
Have questions about your auto insurance policy? We're here to take care of all your Louisville auto insurance needs. Give us a call at (502) 933-2255 to speak to one of our agents or get a free, instant auto insurance quote online from Claude Reynolds Insurance.
By Matt Reynolds - Google+
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