How to Buy a New Car without Losing Your Shirt

Buying a new car can be a very stressful situation. The biggest fear new car buyers have? Not that they will buy the wrong car, but that they will lose their shirt in the process to the greedy car dealerships. Fortunately this doesn’t have to happen to you. You can buy the right car and not pay any more than you have to. With a little research, practice, and most importantly patience you can navigate the treacherous path of car buying with confidence.

If you are interested in buying a new car this year, take control of your finances right now! No one’s finances are perfect but when you want to buy a new car, your finances need to be as good as they can be. This means paying bills on time and having money in the bank to pay for a down payment for the car. Get a copy of your current credit report and go over each entry to make sure the information is correct.

Most people have enough time to shop intelligently for a car and you’ll want to use this time to get your finances under control. You can improve your credit rating – and this can mean lower car payments by enabling you to qualify for the best auto loan. Even just knowing your credit situation will help you predict what type of financing you qualify for.

Always remember your budget when buying a new car. It can be so easy to be tempted by those fun and shiny new cars. But remember that there is a great car in your budget price and you’ll enjoy driving it. It may not have individual seat warmers or leather seats or other fancy gadgets – but it will still be a very nice car.

When you go outside of your budget this is when the car buyer gets into great trouble with a car purchase. They get a car they just can’t afford. While it is fun to drive (and even more fun to show off) it is just too much car for them to be able to pay for. Better to pick a car that is easier on your wallet than one that makes you lose sleep at night.

Once you know your budget it is time to research and compare cars in your price range. This is easy to do online and you will likely come across several different models that fit your needs. The key is to test drive each one while thinking about the features that are most important to you. Take into account any changes life may bring you in the next few years (marriage, kids, etc). You want a car that has room to grow with you.

Just as you need to be patient when comparing cars, you will also need to show patience when negotiating the sale price. Car salesmen are trained to get as much money as possible from you during the sale, so don't let anxiety or confusion work against you. Know the fair market price of your vehicle along with the current interest rates for your area. If you are uncomfortable with any aspect of the deal presented to you then be sure to walk away. It sometimes takes two or three trips to the dealership before they finally give in to the best price.

Last but not least, make sure your down payment covers 10% of the final purchase price (including taxes and fees). People who skimp out on their down payment often find themselves with negative equity down the road. This means they owe more on their car than it is worth. Consider putting in overtime or find a temporary second job to fatten your wallet.

Car buying can be a big expense for most of us, but you should not buy a car unless you can afford ten percent down. Once you get stuck "upside down" on a vehicle loan you will find it much harder to finance future vehicles. Considering the average American buys a new car every three to five years it pays to get your car deal started on the right foot.