While car buyers once had to visit several dealerships to “kick the tires,” the internet now makes quick work of the shopping process.
Unless you’re paying cash, you’ll want to start by using online tools to determine what you can afford, based on how large a loan you qualify for, how long a period you want it for and at what interest rate. And those factors are all based on your down payment, income and especially credit rating. That’s because the lowest financing rates are typically reserved only for applicants with top-tier credit scores.
From there, visit automakers’ websites to determine which vehicles best meet your needs and budget and to see what incentives may apply. You can also use the Web to check specific dealer inventories in real time. And be prepared to expand the search to dealerships beyond your immediate area to find exactly what you want in terms of features and colors. If, for example, a particular model is more plentiful on some dealers’ lots than others, you may have a better chance at striking a deal with them.
Also, be sure to make the most of online resources to determine the value of your existing vehicle. Given the shortages, it may be worth a lot more than you think, and that can help offset the cost of a new purchase. Try shopping your current ride to multiple new- and used-vehicle dealerships, including the popular online retailers, and accept the highest offer on your existing car before shopping for a new one.
Low inventories and sky-high new-car prices are driving more buyers than ever to the pre-owned side of the lot. The added demand, compounded by the used-car business’ own inventory issues, has also caused prices to reach unprecedented levels.
Still, that’s less than the average price of a new model, and consumers often have more luck finding a specific car in the pre-owned market, with some late-model “certified” vehicles being sold with a warranty and other perks. On the downside, used-vehicle financing rates tend to be higher and the maximum loan periods are often shorter than those for new-car loans.
Leasing a vehicle, rather than buying and financing one, can help ease sticker shock with more affordable monthly expenditures and lower down payments. It’s also a good way to sit out the market until inventories and prices (hopefully) stabilize.
At its core, leasing is essentially an extended car rental in which a consumer pays to use a vehicle for a specific period, usually two or three years. Payments are based on the difference between a vehicle’s transaction price (always negotiable) and what the car or truck is estimated to be worth at the end of the lease term, financed at the going rate of interest. For now, interest rates remain relatively low, while resale values continue to be strong, which helps make leasing an attractive, money-saving alternative.
Of course, leasing is not for everyone. If you tend to treat every car or truck like a beater, you could face a stiff “wear and tear” penalty when you turn it in at the end of a lease period. Plus, leases include strict mileage limits, with a penalty of at least 15 cents per mile for exceeding them. Above all, understand that leases can be difficult—and expensive—to get out of if you no longer want, or can no longer afford, a vehicle.
With dealer inventories remaining razor-thin, it can be prudent to put immediate gratification aside and order a new car, truck or SUV straight from the factory. You may have to wait several weeks or more for delivery, but it remains the best way to obtain a given vehicle equipped exactly the way you want it, and in the exterior and interior colors of your choice.
Since the dealer doesn’t have money tied up in a model being special ordered, you may be able to whittle down the transaction price a bit through negotiation—or, at the least in this overheated environment, pay no more than the manufacturer’s suggested retail price.
When consumers are buying directly, automakers typically allow them to custom-configure their vehicles via their websites, though they’ll be sent with an order sheet in hand to a local dealership to negotiate the final price and process the paperwork. Or you can simply walk onto a showroom floor and conduct the transaction in person. A few innovative brands let shoppers complete the entire transaction online.
Once you put down a deposit (usually no more than $1,000) via check or credit card, you will be given an estimated delivery date. Be sure both you and the salesperson sign the paperwork so the agreed-upon terms are locked in. You’ll also want to read all documents thoroughly before signing, to ensure you’ll be getting exactly what you’ve specified and at the price you have agreed upon, including taxes and title/licensing fees.
Once that’s settled, follow up with the dealership periodically to track your order. If your situation changes or the vehicle is taking far longer to deliver than expected, you often have the option to cancel the order, though you may lose your deposit in the process. But if the vehicle remains in short supply, a dealership may be willing to let the sale slide if it can turn around and sell the car once it arrives. Bottom line, there will always be another buyer willing to pay a higher price for a car—just don’t let it be you.
Leases can be difficult—
and expensive—to get out of if you no longer want, or can no longer afford, a vehicle.
