I had what I thought was an interesting question sent in to me the other day and that is the topic of this article. The question asked was essentially; out of all of the car buying tips, the car deal negotiating tips, and out of all the do’s and don’t do’s when you are car shopping and ultimately buying, what is the single most important area to have under control as the buyer.
I had to preface my answer by saying that in order to get your best deal when buy my car, there are many pieces to the car buying puzzle. They are all individually important because when you put all the buying processes together they make up your deal. And all of these car buying puzzle pieces are what dealerships are all about. They each represent an opportunity to sell you something and therefore make a profit on that sale.
Having said that, this is a great question and you would probably get many different answers. But, since you asked and I have pondered… I’ll give you my thoughts.
I would have to say financing. You must take the time to do such things as:Get and understand your credit report.
Shop around for your financing options and ultimately get yourself pre-approved so you will know the amount, the interest rate you qualify for, and the length of your loan.
If you don’t get your financing questions answered and in order, you can literally cost yourself thousands of dollars. So, while all of the other aspects of buying a car are indeed important, such as the price of the new car, what you get for your trade, and all of the research that goes into these areas; you can literally give it all back and much more in the dealer’s finance department.
“If I get all my financing lined up ahead of time, why would I even bother with the dealer’s finance department?”
A Good question; and there are a couple of aspects to the answer. First, once you know what you qualify for (a bird in hand), you can then give the dealer’s finance manager the opportunity to do even better for you. Secondly, even if you have no intention of using the dealer financing option, you’ll still have to have a seat in the finance office just to sign all the paperwork. Which means the finance person will do their best to “sell” you their financing package. So being prepared is the best answer.
If you have your financing in hand and know all your numbers ahead of time, you’ll be able to fend off the monthly payment approach by the car dealer’s sales person. Buying a car based on monthly payments is good for the dealer; bad for you.
Also, your financing homework becomes even more important if your credit is less than grade ‘A’. Be mindful that just the difference in just a couple of percentage points on your interest rate can represent over a thousand dollars to you during the life of your loan. And if your credit score leaves a little to be desired by potential lenders, you will probably see a wider range of qualifying quotes that you get back. So it is even more important that you get your car financing house in order before you head out to the dealership.
Certainly, financing is but one piece of the buy your car puzzle. But, it’s a big piece. And you can rest assured it’s a big piece (for potential profit) for the dealer. Many people don’t realize that this is yet another area at the dealership that you can and should try to negotiate on the road to getting your best car deal.
If you have done your research and homework to give yourself the best possible chance on the front end of the car buying process (new car & trade-in), don’t give it all back on the back end of the deal (financing & insurance – F&I) by not knowing what your financing numbers and options are.