I've been out car shopping this week. The truth is, I'm always out car shopping, but usually I'm just window browsing. This time it's actually to buy a car to replace my Pathfinder.
Car shopping is looking at different makes and models to get an idea of what you want. Car buying is about numbers. Most car dealers are reputable, but to buy a car you have to have information. The following is a list of information or things I think about when I'm getting ready to buy a car:
- Research. I look at sites like Cars.com, Edmunds, or Autotrader to get a list of available cars in my area. Carmax is also a good source. You can search locally, within a specific radius, or nationwide. You can also narrow your search by make, model, trim level, options, colors, year and mileage. You can also use these tools to read reviews about the cars you're interested in--reviews by regular people or people who work for the companies that manage the websites. I use these tools to put a list of cars together that I'm interested in, before I set foot on a dealer's lot.
- Test drives. Don't ever buy a car without driving it and checking out several other makes and models. You need what I call butt time in the driver seat. Do you like the way it drives? Is the seat comfortable? Do you like the color or colors? The way the car is designed? Buying a car is like entering a multi year relationship. You wouldn't move in with someone based on their online dating profile, so don't buy a car you haven't driven.
- More research. After I've driven some cars, I go back and research them more thoroughly. I look at the reviews and check out publications like Consumer Reports to get information like repair ratings and reliability. I also call my insurance company to find out if my rates will go up and by how much.
- Financing. If you're financing a car it pays to get pre-qualified and know what interest rates and terms are available. The difference between a 3% and 6% interest rate can make a big difference in your car payment.
- Trade in. Are you trading your old car in? What's it really worth? I like to check out sites like Edmunds, NADA.com or Kelly Blue Book to get the value of the car I'm trading in. These sites will give you the value of your car as three numbers--wholesale, private party, and retail.
- Wholesale is the value of your car at a dealer auction. This is also the close to what the dealer wants to pay in actual cash value for your trade in.
- Private Party value is what you could expect to sell the car for yourself, if you placed an add in the paper or online.
- Retail is the price a car dealer would list your car at, if they sold it on their lot.
Normally, I will try to get retail or private party value when I trade in a car. But it depends on the deal. Carmax and stores that offer cars at a fixed price will typically only pay wholesale value for a car. Or if the car I'm buying has been significantly discounted and is far below the retail price, the dealer may not offer much more than the wholesale amount.
Next week I'll talk more about new and used car prices as well as how to equip yourself to negotiate the best deal.