Five Smart Tips for Buying Your Next Car

Dec 19, 2016

MoneyLife100Automakers sold more than 17 million cars in the United States in 2015, which means that at any given time throughout the year many Americans are getting ready to head out to a dealership. How can you drive away with the best deal? The Pennsylvania Institute of Certified Public Accountants (PICPA) offers some savvy advice. 

Research Your Options

It’s important to decide up front which models will best suit your needs, a process you can begin by doing research online or asking friends about their experiences with different brands. When doing your comparisons, factors to consider include insurance rates, safety ratings, fuel economy, and ratings from consumer organizations that assess product quality.  

See for Yourself

While research is valuable, visiting the dealerships and taking test drives are equally important. Bring along the people who may be driving or riding in the vehicle to make sure that everyone is comfortable. If you have young children, bring their car seats or other necessities to make sure they’re easy to load and fit in the available space. Getting a low price doesn’t mean getting a good value if the car doesn’t suit your needs. Call ahead to make an appointment, and avoid going on a busy weekend or evening. Test drive the cars not just around the block, but also on highways and any other types of roads you’ll likely use. Even if the salesperson insists he or she can offer a great deal, feel free to delay your decision if more time is needed to think things through. 

Get Preapproved

There are two great reasons to get bank preapproval for an auto loan before you go shopping. First, the loan amount you can get from a bank or credit union can help you determine how much you can afford to pay for a vehicle. Second, it can give you a good idea of the interest rate that’s available for someone with your credit rating. Even if you decide that a loan obtained through the dealership is a better offer, with a commitment from a bank in hand you may be able to negotiate a better deal on the car or get a reduction on the dealer’s interest rate. 

Do Your Homework on Price

Check online sites that report invoice prices and average sale prices for different vehicles. With those ballpark numbers in hand, contact several dealers and ask their total price for the car that interests you. Confirm that the price they quote includes all taxes, fees, and any add-ons or options. If you’re interested in an extended warranty, prepaid maintenance plan, or other additional service, ask what they’ll cost beforehand so you have time to decide if they’re worth taking. Be aware that you may be able to find some of these services from other sources as well. Use the pricing information you’ve gathered to choose the dealer with the best offer or to negotiate a better price from another dealer.

Also consider contacting the dealership beforehand to save time. While many dealers will evade discussions of price and insist you come in, there are some who will provide a ballpark estimate of your monthly payment based on your credit score and other factors. This proves especially valuable if you use a budget.

Don’t Overlook Discounts

Some automakers or dealerships may have special discounts for members of the military, students, or other groups. You can find out more by looking online or asking dealers about what they offer.  

Consult Your Local CPA

Every day, local CPAs offer clients expert advice on a wide variety of financial concerns, including making a major purchase or obtaining a loan. Whatever your financial questions, your CPA can help you find the answers. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife.
About PICPA

The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 22,000 members working in public accounting, industry, government, and education. Founded in 1897, the PICPA is the second-oldest state CPA organization in the United States.

Money & Life Tips are a joint effort of the AICPA and the Pennsylvania Institute of Certified Public Accountants (PICPA), as part of the profession’s nationwide 360 Degrees of Financial Literacy program.


Subscribe to Money & Life Blogs