When a person is looking to buy a used car, it can become daunting and confusing. However, with a bit of forward-thinking, many unknowns can be addressed. Obtaining a pre-approved car loan, not buying add-ons at the dealership, exceptionally long car loan periods, and buying within a person’s means are some of the issues that are important to address.
Buying the Car That Is Needed, Not More
Before entering a car dealership it is important to have an idea of which vehicle is wanted and also the budget that can be spent. That shiny new red sports car may look great, but if the goal when entering the dealership was to purchase a gas-friendly family vehicle, the sports car is obviously the wrong choice. Take the time to get to know the salesperson a bit to understand if they are being direct and honest. Do not allow a flashy car or a salesperson to distract from what you came there for.
Do Not Sign Six or Seven Year Car Loans
When buying a used car, the car loan is as important as the actual selling price. In general, the shorter the car loan, the better. However, many times people opt for a long-term loan to lower the monthly payment of the vehicle. Lowering the monthly payment seems like a good idea at the time, but the interest that is charged over the course of seven years adds up and makes the car a much more expensive purchase. In most cases, a seven-year car loan will carry a higher interest rate than a five-year loan.
Add-ons Are Bad
After spending hours at the dealership finding a car and test driving, people may become tired and worn out. Stay strong, because this is the most important time of the purchase, in regards to finances. The price of the car has been established with the salesperson, and at this point, the salesperson will hand the purchaser off to the finance manager. The finance manager will work with the purchaser to find the appropriate loan option, but it is important to deny the extra add-ons that they will offer. These add-ons are sold at inflated prices to help the dealership make more money. These prices are very difficult to understand and investigate, so it is best to just say no.
Get a Preapproved Loan
If receiving a preapproved loan is possible, it is highly suggested to secure a loan prior to ever entering a dealership. Although the finance manager will try to push a different loan on the purchaser, there is no need to work with the dealership on a loan. The dealership loan will most likely have a much higher interest rate than the preapproved loan received.
Conclusion
Buying a used car is a great option for many who do not want to buy a brand new car. However, it is important to do the needed research on the vehicles of interest, before entering a dealership. Salespeople will always have their financial interests in mind, so be sure to understand the contract that will be signed, before signing.
