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Being Smart About Buying Cars

Buying Cars

If you’re looking to get rid of your old, beat-up vehicle and are ready to purchase a new car, this article is for you. Buying a new car, however, can create opportunities for mistakes for many buyers, such as if you neglect to consider the various types of car mats online to protect your vehicle’s interior. To make smart decisions about your vehicles and avoid rolling in debt, here’s a guide for saving the most money.

Car dealership

1. Prepare An Approved Loan 

The top advice among auto dealers is to get a preapproved loan from a credible lender before even choosing your car. Firstly, it prompts buyers to think about their budget before setting their minds on a pricey limited model. Secondly, it allows buyers to identify and straighten out any credit issues. Lastly, credit scores also guide buyers on the interest rate that dealerships can offer. If a dealership is charging higher interests than you qualify for, then you know that it’s a deal you should not accept. If a dealership offers a lower interest rate than your preapproved one, consider taking it after checking the terms like down payment and the period of the loan are correct. 

Having a pre-approved loan gives buyers the upper hand but can also cause major issues if the lender is not credible. Online lenders are especially hard to identify so it’s best to turn to a local bank or credit union.

2. One Thing At A Time

When negotiating the dealership, do not respond to questions about whether you will trade-in or get a loan through the dealership. Doing so would reveal all your cards to the salesperson who might then give you a lousy price for your trade-in or increase the interest rate to earn more from you. This makes the dealership way more complicated than it has to be. 

Do one thing at a time. Start with settling the price of the vehicle; a little research before this is beneficial. There are plenty of pricing guides online as well as the price for vehicle models sold in your area so do use these resources to your advantage. 

3. Don’t Get The Extras

Dealerships can get a lot of money out of buyers’ purchases of add ons. After buyers are tired from all the waiting, price settling, and thinking about a trade-in, that’s when the finance manager will be brought to their attention. From there, they sell add ons like protection plans and paint protection plans at prices that are higher than what you’re getting. Most buyers don’t know this and neither do they know how to calculate the prices. So, the best way to avoid this is to just say no.

For longer loans, the finance manager might convince buyers by saying that it’s only a little extra each month. Buyers who are not thinking about the long-term accumulation will take the bait. An extended warranty is a form of insurance but you can always buy it three years later, right before the expiration of the new car warranty. That way, you don’t pay for an extra three years of unused coverage. You can also choose among the dealerships that offer good prices for the extended warranty after three years. If your new car gets damaged and your regular insurance cannot cover the cost to replace the vehicle entirely, the gap insurance can cover the cost difference between the buying price and your normal insurance coverage. However, the gap insurance can be riddled with issues and frequently overpriced. Ideally, you should get the coverage from your normal insurance agency instead of the dealership.

4. Warning For Longer Loans

Taking six- or seven-year loans can be a dangerous endeavour. The monthly payback in longer loans might be lower but the interest incurred is higher. For a seven-year loan, you’re paying more interest in the first few years than the principal amount and most buyers don’t realize this. If this carries on, the money that buyers owe will exceed the value of the car. For instance, in the fifth year of your loan, you might need to sell the car because it no longer meets your needs or you can no longer afford it. Then, not only do you have to continue paying for the vehicle, the vehicle itself doesn’t even serve your purpose anymore. Paying for something that is no longer worth paying is not a smart way to go. 

The best length for a loan for a new car and a secondhand one is five years and three years respectively. These are the sweet spots for car loans as it is more likely that when the car runs out of value or is no longer worth repairing, the loans have already been fully paid for. At the same time, the monthly payment is manageable and buyers know that they are paying for something still of worth to them. 

Something that novice and experienced car buyers should remain wary of is the terms of the loan. Sometimes dealers insert an extra charge or two in the loan which could cost buyers more than they can afford. Some buyers don’t realize this until after they have signed and returned home with the contract because all they can focus on is how they’ve just gotten a great deal. Once this happens, it’s likely impossible to get a refund on those charges, so check the contract thoroughly before making any commitments. 

5. Consider Getting A Used Car

As a general finance guide, car loans, maintenance fees, insurance coverages, gas, and repairing expenditure should take up 20% of the pay you bring home. The car loan itself should be between 10 and 15%, and if getting a new car will exceed this budget, we suggest that you consider used cars. 

The quality of used cars in the market is amazing these days in terms of the mileage and the physical condition of the vehicle. Good cars are being bought and used a couple of years before they are sold yet they can still travel the distance and help car owners save their money. That said, you should definitely look up the car models that have lots of great reviews and a low likelihood of requiring pricey repairs after a couple of years of driving it. 

Other secondhand car users justify their choice by saying that the money used to buy a brand new car could alternatively be saved up for retirement, tuition fees for your children, and lots of other things they would much rather have the fund for. 


That brings us to the end of our tips for making smart purchasing decisions about your vehicles. We peeled back the curtains on some of the tricks of dealerships so you can make the best decision for yourself. The moral of the story is to think carefully about your priorities as well as looking thoroughly through your car loans and contracts before signing them. We wish you the best of luck! 

Written by Mark Greene

Mark Greene is writer and life coach dedicated to helping men to perform at peak level. He shares dating advice, style tips and strategies for building wealth and success.