With sales of new cars at their highest level in six years, the Better Business Bureau of Minnesota and North Dakota is offering some tips to help consumers navigate this major purchase. Buying a new car can be daunting. Making such a large financial commitment – with so many choices available and so many factors to consider – can leave people feeling overwhelmed. If you’re in the market for a new vehicle, here are some things you’ll want to take into consideration first:
- Determine your budget. This sounds straightforward, but there’s more to budgeting a new car purchase than just the monthly payment itself:
- How much gas will the car use? Remember your results may vary from EPA mileage estimates. The website FuelEconomy.gov is a good resource for ‘real-world’ mileage data reported by car owners.
- How much will insurance cost on the vehicle? Contact your auto insurance agent for quotes on various models you may be considering.
- How much will maintenance and repairs cost? Online reliability reports can give you a sense of which models are more expensive to repair.
- When considering monthly payments, use online payment calculators to see how different rates, down payments and loan terms can impact your payment.
- Don’t become so focused on the monthly payment you lose sight of the purchase price, or total cost over the term of the loan. Extending the term of a loan from 60 months to 72 months in the name of a lower monthly payment can mean paying thousands extra over the life of the loan.
- Explore financing options. Visit your local credit union or bank to see what interest rate they can offer on a loan, and then consider getting pre-approved. Having this information (or offer) in hand will allow you to decide whether dealer financing is a better option, and gives the dealer a ‘target’ to match or beat.
- Perform your research before you visit a dealership. Websites such as Edmunds.com provide free information on what you can expect to pay for a particular model in your region, and can help you determine the value of your trade-in. Visit bbb.org to obtain reports on individual dealerships and see how they have responded to any complaints.
- Comparison shop online. You can get a price quote on a vehicle from most dealerships in a matter of hours, and then compare competing quotes. A great time-saver!
- Take it for a spin. Some consumers feel pressured by face-to-face sales, but you need to test drive a vehicle before buying it. Tell the dealer you are there for a test drive only, and will make a decision on a purchase later. Don’t be rushed.
- Look for rebates. Many rebates are available to all consumers, but some carry eligibility requirements that should be disclosed in advertising – loyalty bonuses, active-duty military, trade-in bonuses and more. Make sure you understand these qualifications to avoid disappointment later.
- Understand leasing options. If you decide to lease a vehicle, make sure you’re clear on the terms of the lease, and the pros and cons versus purchasing. Leasing can mean driving a nicer car at a lower monthly payment than might be possible with a purchase, but if you drive more than about 12,000 miles a year or are concerned about “excess wear and tear” charges, leasing may not be the best option.
- What’s the bottom line? When looking at the price of a vehicle, remember you will also pay fees for documentation (capped at $75 in Minnesota), title and registration, along with applicable sales tax.
The Better Business Bureau regularly receives complaints from consumers with “buyer’s remorse.” Buying a car is a big decision. Be sure to do your research; visit the dealership for a test drive and take time to think things over carefully before making a purchase. For more information, contact the BBB at 1-800-646-6222 or visit bbb.org.
The mission of the Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. We are open 8 a.m. to 5 p.m. Monday through Friday. Contact the BBB at bbb.org or toll-free at 1-800-646-6222.