How to Buy a New Car in a Troubled Economy

Buying a car in a troubled economy can seem like a big risk. Some car buyers are worried about whether bankrupt car manufacturers and dealers will be in business and able to service their car in the future. Other car buyers are worried about their jobs and credit reports. The unstable economy is a great cause of concern for many, but you can still buy a car as long as you understand the risks and do your research before buying. Purchasing a car in this climate can be a great decision for your family when you understand the dynamics of the current marketplace and use them to gain an advantage.

Begin by examining your financial circumstances honestly. Can you afford a car right now? What could you afford to put down as a down payment? What type of car payments could you pay? Remember there will be car maintenance and car insurance. Often car insurance for new cars is higher than for an older car. These expenses should be considered with your car costs.

In many cases people discover they can afford a car when they stretch their budget and economize. But now is not the time to rely on budget reductions to buy a car you can’t afford. Instead you should be thinking about the worst case scenario. Plan by anticipating your budget will decline by 20% next year...now what monthly payment could you afford? Looking at your budget this way will insure you don’t get in over your head with a high monthly payment.

Get a copy of your credit report. Your credit report will affect the type of car loan and car payments you are able to receive. It is important that your scores be high – or at least above 650 on the FICO scale. If your scores are not high, work on making on-time payments to your creditors and paying off your credit card bills. Research how to improve your credit score. Some improvement of your credit score can greatly affect your car buying circumstances. This is something you should work on before you even set foot on a car lot.

Once you have determined your car buying budget, start to research the best cars within your limits. Ask yourself if you are open to buying a used car or if you only want a new car. Are you considering a leased car or do you want to buy a car outright? All of these decisions need to be considered and they will affect how much money you spend. Some will affect how much you spend in the short-term and others in the long-term, but each decision involves spending money and should not be handled lightly. Each option offers benefits – don’t assume one option is “better” than another without investigating it first. There are many people buying and leasing cars that are very happy with their choices.

Choose a sound car dealership to do business with. This sounds trickier than it actually is. Look into car dealerships that have been in business at least three to five years. See if you can check references for satisfied customers. Avoid car dealerships that talk about making “any” deal as this can be a sign of a desperate dealership. You want a car dealership that makes sound business decisions just as you make sound financial decisions.

Lastly, research the reputation of the car brand you are considering. Do their cars score well on reliability tests? How do they stack up to their competitors? It even helps to check out their stock market value. Do their financials compare to the most successful car brands? It is hard to predict how well a car brand will fare in the future, but knowing where they stand now should give you some indication of their future performance.

The best way to buy a new car is to reduce your costs on the purchase, financing, and trade-in involved with your deal. Street Smart Car Deals shows you how to save thousands of dollars off your next car purchase - guaranteed.