Purchasing Your Next Vehicle: Seven Steps to Buying with Confidence
Tips for Buying a Vehicle in a Pandemic
Buying a vehicle is one of the most important purchases you will make in life. However, the prolonged effects of the COVID-19 pandemic have posed some issues for hopeful car buyers. Just like nearly every aspect of life, the automotive industry has been impacted by the pandemic, namely in global microchip shortages which experts have said could last into at least 2023. New and used cars are in short supply, and while the car-buying process may look a little different now, it doesn’t have to be a headache. We’ve compiled some tips that will help you feel confident and knowledgeable as you navigate through the process of purchasing your vehicle in a pandemic.
#1. Determine Your Budget
The pandemic has no doubt required you to take a second, third, or fourth look at your finances. So it should come as no surprise that the first step in the car-buying process is establishing a budget. You’ll need to consider how much money you have for a down payment as well as what you’re comfortable spending each month on your car payment. And remember to include other factors associated with your vehicle, such as maintenance costs, insurance, and gas – a category in which prices have surged in recent months. Once you have a number you’re happy with, it’s time to begin your search.
#2. Consider Your Financing Options
Like most people, you’re probably planning to finance your vehicle purchase by taking out an auto loan. You’ll want to arm yourself with a solid financial backing when you visit a dealership. While the dealership may offer you financing, you’re likely to get a better annual percentage rate (APR) by securing financing through a bank or credit union, such as First Service.
Don’t forget to get pre-approved for your loan first, so you know how much money you can spend. If for whatever reason, your dealer refuses to accept outside financing, try to get them to put that in writing by corresponding via email or text. You can use that correspondence in a future complaint to the Texas Office of Consumer Credit Commissioner, the entity that regulates auto dealers’ vehicle sales financing in Texas. And there’s always the option to accept the dealer financing, and then refinance with your bank or credit union for better rates. Just be sure to read the fine print of your contract to make sure there are no fees associated with paying your auto loan off early.
If you have a trade-in, be sure to let your lender know upfront so you can determine the true value of your vehicle. If you owe less than the car’s value, it can be applied toward your next car. First Service can help you determine your true trade-in value.
#3. Be Flexible
Consider what features are most important to you in your vehicle and which ones you can do without. The market is tight, and you’ll better your chances of getting a car if you’re flexible on preferences, such as color, body style, and trim level. However, if you’re willing to travel a bit farther, you can also check dealerships out of town – or maybe even out of state – to expand your options.
#4. Do Your Research
Because dealer inventory is limited, it’s wise to search online at different dealerships to see what vehicles they have on the lot or what’s on the way to be delivered to the lot. You can also compare prices across dealers, so that when you do decide on a dealership, you’ll have an idea of a fair price for your car. If the prices aren’t listed online, make sure to communicate via email when requesting prices, so you have a written record. Researching online before heading to a dealership also cuts down on time because you’ll be able to tell the salesperson exactly what you want, and you’ll feel confident knowing that you’ve done your due diligence.
#5. Take Advantage of Test Drive Periods
In order to stay competitive in this market, many dealerships have started offering 24-hour or even one-week test drive periods. Be sure to take advantage of this option. If you’ll be purchasing a used car, you can use this time to let a trusted mechanic take a look at the car to make sure everything is in order. It will also give you experience operating the car, so you can make sure it’s a good fit.
#6. Be Aware of Market Adjustments
Currently, less vehicle inventory means higher prices for consumers. Dealerships are trying to recoup money they are losing from having fewer cars on the lots. So consumers are seeing higher dealer markups or “market adjustments” on new and used cars, which can be several thousand dollars. This is due to high demand and low supply, which means car buyers don’t have as much bargaining power to haggle. But that doesn’t mean you shouldn’t try to negotiate for a better price.
Tip: Leverage Your Trade In
If you’re trading in a car, you can use that as leverage when shopping for your new car. With the industry-wide inventory shortage, dealerships are in desperate need of vehicles. Never let the dealership know upfront you have a vehicle to trade in. Instead, wait until after you have a written purchase order. That way, you will have already negotiated the lowest price possible for your new vehicle. Try to negotiate for a higher trade-in price, which will lower the price of the vehicle you purchase.
#7. Be Prepared to Make a Quick Offer
With limited dealer inventory, there won’t be many, if any, new cars to test drive, and most buyers will jump at the chance to purchase. So, once you find a vehicle you like, it would be beneficial to make a quick offer. If you’re serious about a particular car, lock it in. Sometimes this means putting down a deposit on a vehicle that hasn’t arrived to the lot yet. The deposit is meant to show that you’re serious about purchasing the car and, depending on the dealer, it could be as little as $500. Laws vary state to state, and dealers may have their own agreements when it comes to deposits, so be clear on the details before handing over the cash. If you have any apprehensions about the vehicle, especially if it’s used, make sure your concerns are addressed before you put down a deposit.
Tip: Order the Vehicle You Want
If you don’t need to make an immediate purchase, consider ordering the vehicle you want. You can email multiple dealers with exact specs and have them bid against each other for the lowest price.
#8. Carefully Review Your Paperwork
If you’ve followed all of these car-buying tips, you should feel confident when you get to the signing paperwork stage of the process. Be sure to carefully read through everything on each page before you sign, and don’t be afraid to ask questions if you need clarity or if something doesn’t make sense to you. This is also the time to watch out for additional add-ons, such as extended warranties and protection packages. If you don’t have a need for these, tell the dealer to remove them from your loan contract before signing it.
#9 Drive Away Happy
Once you’ve signed all your paperwork and have been given the keys to your new car or truck, let the celebrations begin. Not only did you get the vehicle you wanted, but you successfully navigated the car-buying process during an especially difficult time. Congratulations, and enjoy your new ride!