A car makes a great financial asset. In terms of value, it is probably second to your house and education. It is a big deal to reach a point where you can purchase a car. So, if you are at that point, pat yourself on the back!
Now, if we consider the statistics, the conventional ways of buying a car have seen a paradigm shift. Gone are the days when consumers would walk in the showroom, listen to the sales pitch, take a test drive, and voila, bring the car home.
These days, 59 percent of the potential buyers spend their time researching on the internet before making car purchases.
Moreover, of the top five online activities, 71 percent constitute researching car prices, 68 percent involve finding listed cars for sale, 64 percent are about comparing different models, and 46 percent are about locating car dealers.
With that being said, the quest to get the perfect car—and that too, with a cheap price tag—can be frustrating enough to make you raise the white flag eventually.
To make things easier for yourself, consider the following five smart ways, and save money on your next car purchase.
1.Never lease a car
What makes a car lease so tempting?
Well, if you plan on keeping a car for a few years only, leasing is not a bad option considering it allows you to make small and affordable monthly payments. Moreover, it saves you from the worry of depreciation.
On the surface, it is a pretty good deal, but deep down, it is a devil in disguise. The lease companies recoup money from the customers through deceitful policies. For instance, leases have mileage limits; so, you are penalized if you exceed that limit.
Some consumers fail to keep track of the miles and suffer the consequences.
We’re sure that nobody likes to pay $1000 for a mere scratch and a windshield chip. However, that’s a fairly common scenario when a car lease is brought under the microscope.
Even though the dealers persuade you into a good-for-nothing protection package but somehow still find a way to penalize you, using their obscured wear-and-tear criteria.
To cut a long story short — ditch the lease and pay upfront.
2.Play Smart and Research
Sure, you’re getting what you wanted, but have those fleshy yet unwanted features caught your attention?
When you look for a car, always keep those bells and whistles under the radar.
Even though a car might appear to be just a regular one, it could be having some underlying features. And those exact features could end up getting a few extra dollars from you.
So, why get carried away by Mercedes S550’s electronic fragrance system or Porsche’s leather air vents when you can get the job done without them!
Once you make up your mind on all the features you want in your car, compare the prices of the car models that go in line with those desired specifications.
These days it is easy to learn about every feature and specification of a car. All it takes is the right combination of words, and the internet would do the job for you.
There are many country-specific automobile forums where customers can look for car models, check specifications, and find a reliable dealership.
For instance, if a person is from the UK, they could Google “how to buy a car in the UK.” The results will give a list of all the online forums where they can compare car prices and check all the models that fall into their budget range.
When you see a side-by-side comparison of different models, it helps you narrow down your options and find the best possible car that suits all your needs.
3.Buy with Cash
If you can afford to pay upfront, it never is a good idea to opt for a financing deal.
When you plan on paying interest for a car that is going to depreciate actively, you are actually planning for a disaster.
Consider this scenario: The car costs you $30,000, and you put a down payment of $5000. If the deal includes an interest rate of 6.9 percent, then you’ll be paying over $3600 when the load period completes.
But there is more to the story.
If the car depreciates at a rate of 20 percent in the first year and 15 percent in the next one, it will lose around $13,700 during the loan period. So, you would be losing $17,400 in total.
On the other hand, if you pay with cash, you will be saving yourself from the interest rates and off-the-lot depreciation.
4.Make a Comparison Table
The marketers and salespersons look for the sweet spots in consumer psychology and then lure them into buying things that we don’t necessarily need.
One systematic way—to get your priorities right and then buy the most financially-viable car that corresponds to those priorities— is the ‘method of assigning weights.’
Here’s how you go about it: make one-on-one comparisons of all the features you wish to have in your car in the form of a table.
Assign a ‘one’ if a parameter in question is more important to you than what it is being compared with; assign a ‘zero’ if it’s not. Then calculate the weight of each of the parameters.
The next step is to make another table and assign a separate column for the models being compared.
Rank the model for every feature, multiply the number with the weights and then do the total. The model that provides the biggest number is the one to go for.
The following tables sum up the process of the brake’s selection for a bicycle:
5.Negotiate a little
The best way to drive a hard bargain? Negotiate through the emails and phone calls instead of doing it in person.
The salesperson could overwhelm you with the in-person interaction. However, you can always buy time, research, and then throw them off their game if you opt to negotiate on email or phone call.
Not to mention, you could make a price comparison, send in a quoted price and ask the customer representative if they could beat it.
Moreover, some hidden fees stay at the discretion of the dealer. So, try your luck to convince them to waive off the delivery fees, keys, or window-etching charges.
Considering the worst-case scenarios, if the dealer doesn’t come down on the prices, you could always request some add-ons such as tire upgrades or free oil change for the next couple of years.
Just go for it!
Now you know where to start when buying a car. You can implement the game plan, but don’t end up overthinking.
Buying a car is a long process. If you go without research, you might end up paying more for the car than its real cost. However, if you go after doing thorough research, you might save some money on your purchase.
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