Car purchase
I’d like your advice on purchasing a car. I am retired and I’m looking at new cars and also certified preowned cars.
I have enough savings to put a sizable down payment. Should I pay 1/4 of the value, 1/2 of the value or 3/4 of the value of a new preowned car. I will not need the balance financed because I should be able to pay at least $500 or less per month to complete the transaction. Also, what are your thoughts about leasing? Thank you
Terry Says
Whew, you really need someone to help you through the process, or you’ll pay what my son calls the “little old lady” tax! (Sorry, he’s not available to you — but I wouldn’t buy a car without him!) So here’s what he taught me, in brief.
First step in buying a car is to go in and act as if you’re paying cash. You need to negotiate the best price on a specific car. So, actually, you need to know exactly what kind of car you want. Go test drive some new cars. DONT BUY!! Go to at least two dealerships.
If you see a car — model, color, accessories — that you like, tell them you’re a cash buyer and ask for the best price. THEN WALK OUT! They may say that the manager might offer a better deal. Get it — and walk out. Don’t worry, they’ll call you the next day! Then go to another dealer and do the same thing! (Car dealers will absolutely hate me for giving you this advice!)
When they give you the price, ask if it includes all destination and documentation fees, and all charges, including sales tax. You have to compare the FULL price you will pay to buy the car. Tell them you’d like that in writing. But don’t sign anything. Tell them you’ll think about it.
Now check with your credit union, if you are a member about the cost of a car loan. BUT you are always better buying for cash. You aren’t earning that much in your savings these days anyway. Dealers make their money on financing.
If you can’t afford to pay upfront in cash, decide how much cash you can spend. Then go back to the dealer you like and remind them of the purchase price they gave you — And only now, tell them you’re thinking to finance a part of the purchase. ASK THE RATE! Do that before they tell you the monthly payment.
You don’t want to lease. And you likely don’t want a pre-owned certified car — since the deals lately are better on new cars. So maybe choose a less expensive new car.
I know you wouldn’t need this advice at the supermarket, looking at the produce or meat counter. But believe me, a car is a BIG purchase and there are lots of ways to be taken! Do your homework.
