Top 10 Things You Should Know About Buying Or Leasing A Car

Top 10 Things You Should Know About Buying or Leasing a Car

Buying a car is a pretty big deal — emotionally and financially. The last thing you want to do is have buyer's remorse the second you drive off the lot or feel like you were suckered by the dealer. Let us help you with our top 10 car buying tips.

Illustration by Tina Mailhot-Roberge

10. Figure Out If You Really Need a New Car or If You Can Repair Your Current One

Top 10 Things You Should Know About Buying or Leasing a Car

Maybe you don't even need to replace your car. Maybe you can keep your old one chugging along for a few more years. It's not an easy decision, so you'll have to do the maths about maintenance and repair costs for your current car compared to its market value and your budget. This flowchart from Consumer Reports walks you through some of the considerations when weighing repairing or replacing your car.

9. Time Your Car Purchase

Top 10 Things You Should Know About Buying or Leasing a Car

There's a best time to buy anything, and cars are no exception. A Sunday in the beginning August seems to be the overall sweet spot for saving money on a new car, but there are other times when you can get great discounts on a car, such as certain holidays and the end of the year when dealers race to meet sales goals. The same technique might work at the end of the day and at the end of the month too — times when you might be able to negotiate better with the dealer. However, if you have your heart set on a particular model, there's no guarantee it will be in inventory at these times, so weigh how much you might save with the downsides to waiting.

8. Forget Leasing (Usually)

Top 10 Things You Should Know About Buying or Leasing a Car

Leasing is almost never cheaper in the long run compared to buying, but for some people in certain situations, leasing might be better. (Even the folks at Jalopnik don't agree on this matter: Leasing is smarter than buying but leasing is horrible for car lovers? If you do decide to lease, just know how to do it without getting fleeced.)

7. Learn Negotiation Tactics (and Dealer Tricks)

Top 10 Things You Should Know About Buying or Leasing a Car

Car dealers are notorious for trying to screw customers over and squeeze every penny out of you, but if you know what to say and when to walk away, you can get a better deal on a new car. The best techniques for negotiating with dealers include, well, not negotiating: Just set your target figure that you know the car is worth, and follow up on days and times when the dealership might be more compelled to work with you (see timing, above). Look for the dealer's "holdback" item, an incentive that can help you negotiate the car price closer to the actual invoice price, and other fees that you can get removed, such as advertising and dealer prep fees. Know that some car options and add-ons aren't worth having the dealer install.

6. Try the No-Haggle Approach

Top 10 Things You Should Know About Buying or Leasing a Car

You're best off not even dealing with the car dealership until you're ready to buy. I like this friction-free approach mentioned on Edmunds: call (or email) dealers asking for their very best price, saying that you'll be purchasing the car that day at the dealer who has the best offer.

5. Know How to Test Drive a Car

Top 10 Things You Should Know About Buying or Leasing a Car

You know how to drive, but do you know how to test drive a car? Look for the little details about (comfortable seating position, other things that might not seem right), drive the car like you would on a daily basis, and follow these other tips to get the most out of your test drive.

4. Get Your Own Financing

Top 10 Things You Should Know About Buying or Leasing a Car

It helps if you can buy with cash (some say we should never finance a new car), but we're not all millionaires. If you do need financing, get the loan before going car shopping so you have more payment flexibility and better rates. Plus you'll be able to avoid sneaky fees tacked onto dealers' loans.

3. Set a Reasonable Budget

Top 10 Things You Should Know About Buying or Leasing a Car

When you buy a car, you're not really "investing" in it, you're buying a product that depreciates quickly over time and which you'll likely replace in a few years (even buying a classic car is almost never a good investment). When buying a liability like this, make sure your car buying budget is in line with your other financial priorities and goals. Use the 20/4/10 rule — 20% down, financing for no more than four years, and monthly vehicle expenses under 10% of your gross income — as a guideline for not buying too much car or taking too big of a loan out for one. If you're not a car nut, 10 to 15 per cent of your annual income might be reasonable to spend on a car, but most people might be best off looking to spend about 20 to 25 per cent of their annual income.

2. Buy a Used Car Without Getting Swindled

Top 10 Things You Should Know About Buying or Leasing a Car

Buying a car — whether new or used — comes with risk. If you decide to buy used (after considering these questions), follow these ten steps listed on Jalopnik to buy a new old car for yourself safely. Also, Craigslist is a popular resource for buying a used car, but you have to be careful: Assume the person selling the car is a con artist, get the car inspected, and follow these other tips to make sure you don't get swindled. Another (surprising) source for used cars: Car rental agencies (rental cars can be good buys). If you buy a luxury car used, you'll likely get it at a bigger bargain compared to economy vehicles.

1. Do Your Research and Be Patient

Top 10 Things You Should Know About Buying or Leasing a Car

Finally, the most important thing is to do your homework. One study found that car buyers who did two things saved an average of $230 on their cars: learned how much the dealer pays for a car and visited two dealerships. If you can do more research, you'd save an average of $800 on your purchase. Popular car comparison sites can help you do the research you need. Also, check your emotions at the door, since this is primarily a financial transaction. As with any other major purchase, take your time so you can get the right car at the right price.

Bonus: See Jalopnik's 10 things you should do when shopping for a new car.


Comments

    Leasing works out significantly cheaper for me. Novation means I save 5k a year paying out of my pre tax income.

      I think this US article is talking about leasing from the dealer, not novated leasing where you're leasing from your employer.

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