Buying a car? Avoid these wrong turns

Buying a car is like an epic adventure. There are heroes (you), sidekicks (your wingmen who accompany you to the dealership), foes (the sales manager who just won't give up on the undercarriage rust-proofing) and even a prize at the end (your shiny new vehicle). And like any journey, buying a car can be fraught with perils and wrong turns.Fortunately, a few simple steps can help ensure your car buying experience is a great adventure that doesn't turn into a detour to financial disaster. Here are some common wrong turns and how to avoid them: 1. Failing to check your credit before going to the dealership. Unless you're paying cash - something many people cannot afford to do - you'll be financing your vehicle purchase. You need to know what's on your credit report and how strong your credit score is before you apply for financing. This will give you an idea of what loan terms you might qualify for. Websites like creditreport.com can help you understand your credit. A membership to CreditReport.com includes daily monitoring of your credit report to help you manage your credit, know your score, and catch potential fraud quickly. 2. Not having financing lined up before you shop. Once you have a handle on your credit, it's important to explore your financing options before you ever set foot on a car lot. Yes, virtually every dealer can help you with financing, but there's no guarantee they will be able to offer you the best terms. You may be able to qualify for a lower interest rate through your bank. Having checked a couple financing options before you shop ensures you know exactly how much you can spend, and gives you more bargaining power at the dealership. 3. Not knowing what the actual price of the car should be. There's the price the dealer puts on the car - the sticker price - and then there's the price you should actually pay. Most automotive experts agree, you should start your negotiations based on the invoice price, which is what the dealer paid for the vehicle, and pay only a few percentage points over that price. Fortunately, online resources like Edmunds.com and KBB.com can help provide an idea of what you can expect to pay for any vehicle you're thinking of purchasing. 4. Looking at the monthly payment, rather than the actual price. When you're car shopping, it's easy to take the wrong turn and focus on how the monthly payment fits into your budget. But that doesn't give you an accurate picture of the true price of the car you're financing. You may think you're getting a good deal on the sale price, but if you're paying thousands in interest over the life of the loan, that deal may not be as good as you think. For example, if you finance a $25,000 vehicle with no money down and no trade at 7.5 percent interest over six years, you'll pay nearly $6,200 in interest, according to onlinecalculator.org. That means you haven't bought a $25,000 car, you've bought one that actually costs you more than $31,500. 5. Buying costly add-ons or features that you don't need. Remember the sales manager who just won't take "no" for an answer when it comes to the rust-proofing? Add-ons - services or products that the dealership tries to sell you after you've chosen your vehicle - are a significant revenue stream for car sellers. Often, however, the items are ones you really don't need. For example, if you're buying a new car, do you really need the extended warranty plan? In most cases, the manufacturer's warranty should be sufficient. Be sure to read all the fine print on your sales contract before signing anything. If the dealer has included add-ons you don't want or need, ask to have them - and their costs - removed. If the dealer balks, threaten to walk; there are just too many car dealers out there to settle for less than the best deal possible. ARA Content

********** Published: February 2, 2012 - Volume 10 - Issue 42