Buying a New or Used Vehicle

Determine what type of vehicle to buy

Consider how you generally use your vehicle. Do you commute to work everyday (drive at least an hour each day to and from work) or do you mainly drive around town? Do you need a larger vehicle to carry more passengers or extra cargo space for hauling materials? Also, consider how much vehicle you can afford. Take into account not only price and monthly payment but also license, insurance, repairs and fuel economy.

When purchasing a new car, be aware of certain pricing terms

The sticker price is the price on the window of a new car. This value is also known as the manufacturer's suggested retail price (MSRP) for the vehicle. Know that the sticker price can be as high as 25% above what the dealer paid for the vehicle. Keep in mind that the sticker price is only the suggested retail price, not the actual price. The dealer invoice is the wholesale price for the vehicle. This figure is an average of 16% below MSRP. It is a good idea to know the dealer's invoice before going to the dealership. Price guides, available at the local library, contain the newest year dealer invoice on various models. You may also ask the salesperson for the dealer's invoice. The true invoice is the price the dealership actually paid for the vehicle. Many dealerships receive incentives or rebates from auto manufacturers for selling large volumes of autos or for good ratings on customer satisfaction surveys. These rebates may or may not be passed on to the consumer.

Negotiating a good purchase price

Before negotiating a deal, do your research prior to going to the dealership. Know how much you are willing to pay and be firm. Also, know the dealer's invoice. A good purchase price is considered to be anywhere from $300-$1,000 above the dealer's invoice. Keep in mind your negotiating power sometimes depends on how bad the dealership needs to make sales and also the popularity of the vehicle you are considering. Never talk about monthly payments or say how much of a monthly payment you can afford. Instead focus on the overall purchase price of the vehicle. Be patient when negotiating a price but always be prepared to excuse yourself from the negotiating table and walk out if necessary.

Before you buy a used car

Before buying a used car, check it's value by obtaining a copy of a used car price guide readily available at newsstands and libraries. These guides usually take into account model, year, options, wear and tear, and mileage in determining values. The best values for those looking for used transportation are vehicles that have just come off a lease. Heavy penalties for high mileage and excessive wear and tear ensure that you are purchasing a vehicle that has been taken care of. Always have the dealership provide a warranty for a used vehicle and always have the vehicle inspected by an independent mechanic before you buy.

The above information should be understood to be a general discussion of the subject matter and DOES NOT constitute a legal opinion about the situation. For further information please consult a qualified attorney.

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