Investing in a Vehicle: 7 Reasons You Should do Some Research Before Buying a Vehicle

Buying a car can be an exciting but nerve-wracking time for most people. While test drives and checking out features can be a fun foray, buying a car is a huge investment. It requires in-depth research and solid understanding of your finances, the vehicle you’re purchasing, and what exactly you need from a vehicle. All these factors play heavily into how satisfied you will be when the pink slip is in your hands and the payments are coming out of your bank account.

  1. Know the invoice price

Let’s be honest, while we may wish that money was no object when buying a car, the simple fact is that we often have to start with a price and work back from there. The invoice price of a vehicle is what the dealer actually pays the manufacturer for the car; the MSRP (manufacturer’s suggested retail price), on the other hand, includes hundreds or thousands of dollars in profit for the dealer.

Unless you are looking to purchase an extremely popular or brand new model, you will have some wiggle room to get the price of the car closer to the invoice price than to the MSRP. Coming into a dealership with the invoice price will also show the dealer that you’re serious about buying—but also serious about getting a good price.

However, finding the invoice price can prove tricky. Many websites purporting to offer the invoice price of vehicles are actually lead generators for dealerships and will sell your information, so you should be aware of this when submitting information.

  1. Know your credit history

When you begin the steps to purchase a vehicle, you will most likely need a loan. Your credit history will decide how much that loan will cost and knowing your credit history will give you a better idea of what to expect from lenders. The FACTA act of 2003 permits every consumer a free copy of their credit report once a year from each of the three main credit-reporting agencies—TransUnion, Experian, and Equifax. Get a copy of your history before going in to car shop and check it for accuracy. Also, pay the couple extra bucks to get a copy of your credit score as well. This is one of the major factors banks use to determine your interest rate on your loan and how worthy of credit you are.

  1. Check to see if the manufacturer is offering rebates

As a buyer, it’s not unlikely that you’ll qualify for multiple rebates when buying a new vehicle—but you may not know it. Rebates can come from a variety of places, such as organizations you belong to or coupons you’ve received. However, you will have to hunt down these rebates and also double check to make sure you received all of them. Some dealerships have been known to keep one or two as a bit of extra profit instead of passing along the savings to you.

  1. Know your dealer

There are review sites for everything these days. From your doctors to your restaurants, there is no limit to the places you will find people giving their opinion on the service they received. Trust us, car dealerships are no different.

Buying a car from a fair and helpful dealer will save you money overall and make your car buying experience a lot more positive. However, websites offering reviews on dealers are spotty. Your best bet is just to ask people. Using social media platforms or chatting with friends is the fastest way, and people are more than happy to offer positive or negative experiences with their car buying adventures.

  1. Consider the time when you purchase your car

You may be surprised to learn that car dealers operate on a month-to-month basis. At the end of each month, most dealers will be willing to accept lower offers on vehicles so as to allow them to qualify for manufacturers’ bonuses and reach their sales’ goals. Like most things, the price of cars is actually quite malleable for dealerships. If you’re not dead set on having the latest, fully loaded model that just hit the salesroom floor, then the end of a model’s year is a perfect time to pick up some of the old inventory.

December, and particularly the end of December right before the new year, is a very slow time at car dealerships, which makes it a great time to buy. This is also true for mid-April before tax returns come in. There are tons of strategies like this you can find at Car-Buying-Strategies.com that you can use for your benefit.

  1. Come with your own financing

A car dealer’s finance department is where they make their most serious profits. Dealerships have contracts with banks to get the best available rate, but they may not actually give you those rates. While the dealer might be getting a loan for 4.99% APR, they may offer you the loan at 5.99% or even higher. That mark-up? That’s all profit for the dealer.

This is why you should never purchase a car on your first visit to a dealer. Instead, check your bank to see if they can offer a better interest rate (they often can), or you can take those rates back to your salesperson and try to get them to beat them.

  1. Don’t buy a car on your first visit

As we mentioned above, buying a car on your first visit is a serious mistake. Your first visit should only be to look at and test drive the cars you’re interested in. Get as much information as you can, including pricing, information on the cars, services performed, etc. and then leave. Most dealers will ask if you want to do business that day, but make it clear that won’t be happening.

Also, watch what you say to the salespeople—especially when they ask how much you’re willing to pay monthly. What that tells the dealer is exactly how much they can inflate the price with their own profit margin. Suddenly, you’re maximum monthly spend is the baseline of negotiations, and prices will only go up from there.