3. Form of payment
Whether you’re using a check, cash, or a loan to make your purchase, you’ll want to have your payment ready. If you’re getting a loan with the dealership, prepare to be there a while to handle all the relevant paperwork.
Be prepared to pay a down payment at the dealership, too. Call the dealership before you go and speak to the financing department to see what documents they require — and ask about pre-approved financing.
4. Recent pay stubs
If you plan on getting a loan through the dealership, they may require you to show proof of your recent employment. Bring a couple of your most recent pay stubs just in case.
5. Recent utility bills
If you’ve moved within the past year, you’ll need to produce current proof of residence in order to buy a car. Bring a few utility bills with that are dated within the past month, and show your new address. Be sure your account number’s on the bill in case they need to verify the information with the utility company.
6. Credit score and history
While the dealership will be able to pull your credit score and history, check it yourself, review it and bring it with you when you plan to buy your car.
7. Discount information
If you’ve got a discount coming from your credit card company, the dealership, the manufacturer or anyone else, make sure you have all the necessary information with you so you don’t miss out on the deal. Walk through the fine print of the deal slowly, so you fully understand the promotion.
8. A list of references
If you don’t have great credit and are applying for a loan through the dealership, you might also have to supply a list of references who don’t live with you. Have this on hand with the names, business address and contact information of people who can vouch for you.
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How to Buy a Car from a Dealer
At first blush, the process of buying a car from a dealer can seem easy enough. Maybe you’ve already got a few new car purchases under your belt and feel pretty good about the process. But what if you were to learn later on that you may have paid thousands more than others did for the very same vehicle? Buying a car off the dealer’s lot can be expensive if you wing it.
Exactly how to buy a car from a dealer is all about preparation and execution. Here’s six tips to consider — when buying a car from a dealer — that can really help you save:
1. Learn about pricing online
One of the best things to know before going to a car dealership is the reasonable price range for the car you’re considering. Look at Edmunds.com and Kelly Blue Book and plug in the details on the vehicle you want to buy. Then, dive into pricing at local dealerships and put together a spreadsheet with the following details:
- Year, name, make, model and options package of the car you’re considering
- Name of the dealership
- URL or link to the dealership page featuring the car
- Stock number of the car
- Cash back and rebate details offered locally and online
- Special financing details offered by competitors
- Extended warranty package options and pricing
2. Get your free credit report now
Did you know you are entitled to one annual, free credit report from each credit reporting agency? To get yours, you’ll need to reach out to each of them separately and make the request:
Be sure to check for signs of unpaid or late bills and resolve those issues before heading to the dealer. Learn more about how you can improve your credit score.
3. Apply for financing from multiple lenders
Car dealerships price the actual cost of their vehicles very competitively, but the financing packages from one dealer to the next can vary widely. Again, the internet is your friend here — look online for financing deals from:
- National and local banks
- Neighborhood community banks and credit unions
- Exclusive, online auto loan financing groups
- Compare financing offers between target dealerships
4. Understand financing variables and terms
It’s a good idea to really dial in on how you intend to pay for the car before going to the dealer to buy a vehicle. Much of the money to be saved can be found hiding in the auto financing component of the deal:
This is the cash-on-hand you’ll be paying toward the purchase price of the car. Larger down payments can help you avoid longer and more costly payoff schedules. And with more cash down, you'll save on interest payments over the life of the loan.
The annual percentage rate for the loan usually contains lender fees and interest you’ll pay for borrowing the money from the bank or lender.
Term of the loan
It’s best to aim for an aggressive payoff schedule to keep up with depreciation. Try to pay off new cars in 60 months and do your best to aim around 36 months for used cars.
Taxes and dealer fees
Dealer fees and transferring costs are expenses the dealer incurs for marketing the car and transporting the vehicle from auction or other locations. These costs vary by dealership and may be negotiable.
Taxes, state and local registration fees are not going to be negotiable. Together, these costs can add up to about 10 percent of the total cost of your car.
5. Call your agent
Be sure you reach out to your American Family Insurance agent for a quote on the year, make and model you’re considering. A lot can change between cars and it’s best to understand what your new premium will look like so you’ll be able to budget for your new car with greater accuracy.
Another key consideration to make when buying a car from a dealer is gap lease & loan coverage. It helps you avoid a hefty monetary hit if you find yourself owing more on the car than it’s worth — after a total loss.
6. Build a budget
Before getting to the dealer, be sure you’ve got an accurate picture of what you can afford to pay for a new car each month. Be sure you’re factoring in all the costs outlined above, and look online for a robust auto loan calculator to help you estimate all the expenses you’ll encounter at the dealership.
When exploring how to buy a car from a dealer, remember: this is a business transaction and it’s your money in the balance. You really can save money by arming yourself with what to know when buying a car from a dealer — and you may save a bundle doing so.
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Have you got car buying questions? We’ve got some answers!