Guide for First-Time New-Car Buyers

By Selina Tejeda, Brice Thomas, Javine Toms, Amanda Wachtler, and Kayla Wukasch

Guide for First-Time New-Car Buyers

Group 5 TECM 2700 – 5WK2

August 8, 2014

Table of Contents v

Table of Contents Table of Contents ........................................................................................................................... v  

Introduction ................................................................................................................................... vii  

Chapter 1: Budget .......................................................................................................................... 3  

Create a Budget ......................................................................................................................... 3  

ConsiderFuel Efficiency ............................................................................................................. 3  

Consider Maintenance .............................................................................................................. 3  

Chapter 2 – Preparation and Research ....................................................................................... 7  

Determine Your Needs .............................................................................................................. 7  

Determine Your Wants ............................................................................................................... 7  

Prepare to Visit the Dealer ........................................................................................................ 8  

Chapter 3 – At the Dealership .................................................................................................... 13  

Test Drive a Car ........................................................................................................................ 13  

Recognize Dealer Tricks .......................................................................................................... 13  

Negotiate a Deal ...................................................................................................................... 14  

Frequently Asked Questions ........................................................................................................ 17  

References ................................................................................................................................... 19  

Index ............................................................................................................................................. 21  

Introduction vii

Introduction The purpose of this manual is to guide first-time car buyers through the process of buying a new car. Purchasing a car is a major and costly decision, so it is important to know your budget, understand what qualities you want in a car, and be comfortable with closing the deal.

To use this manual, you only need basic knowledge of your budget and the qualities you are looking for in a vehicle. You can read and understand this manual in fifteen minutes.

Buying your first new car is an exciting process. If you follow these instructions, you will be able to purchase a great new car that you can afford.

Chapter 1: Budget This chapter will help you create a budget for your new car. This is a very important step because knowing your budget will allow you to make a smart financial decision.

What to Expect in the Chapter • Create a Budget • Consider Fuel Efficiency • Consider Maintenance

Chapter 1 3

Chapter 1: Budget When buying a car, it is crucial to understand your finances. If you follow these instructions, you will gain knowledge of what kind of cars are in your price range. Create a Budget

1. Calculate the following: a. your monthly income b. your monthly expenses such as rent, electric bill, water bill, etc c. your money you have left after these bills are paid

2. Make an estimate of how much you can afford for a monthly payment. 3. Look up the value of your current vehicle. 4. Subtract what you owe on the car from its value to determine if you have any

potential equity in the car. 5. Make a list of the new cars in your price range that you like.

Note: Make sure you obtain the actual monthly payments from the dealer for al l the cars on your l ist.

Consider Fuel Efficiency

1. Calculate the following: a. the number of miles you drive on your daily commute b. the number of days per month you drive your commute c. the amount you normally spend on gas per month.

2. Find out the gas mileage of your current car. 3. Input these numbers into the following commuter calculator:

http://www.ezcommute.net/calculator.htm 4. Research cars that allow you to match or decrease what you can spend on gas each

month.

Consider Maintenance

1. Calculate how much you can spend on car maintenance annually. Note: Research the cars that require the least maintenance.

2. Research cars that fit your budget using http://www.autotrader.com/research/.

Chapter 2: Preparation & Research Once you know how much you can spend, it is important to understand what you are looking for in a car. This chapter will give you ideas on what is available in addition to preparing you for the trip to the dealership.

What to Expect in the Chapter • Determine Your Needs • Determine Your Wants • Prepare to Visit the Dealer

Chapter 2 7

Chapter 2 – Preparation and Research With the amount of choices today, narrowing down your choices can be daunting. Follow these instructions and you will be an informed buyer before you step into the dealership. Determine Your Needs

1. Make a list of what you need in a car like the list below. • Anti-lock brakes • Electronic stability/skid control • A/C and heat • Air bags • Power steering • Cruise control

2. Narrow your search to cars that have the qualities on your list. Note: Figure 1 is an example of the breakdown of features in a new car.

Determine Your Wants

1. Make a list of what you want in a car like the list below. • GPS navigation system • DVD player • Upgraded sound system: subwoofer, in door speakers, touch LCD radio • Lighted door stills, lighted cup holders • Upgraded performance package: Brembo break package, upgraded tires,

upgraded exhaust • Auto-start/keyless entry • Heated/Cooled seats • Heated/Cooled cup holders • Satellite radio • Bluetooth connectivity • OnStar (GM cars only) • Sync (Ford cars only) • Reverse camera • Side view assist • Parking assist • Adaptive headlights

8 Guide to Car Buying

2. Narrow your search to cars that have the qualities on your list.

Note: Figure 1 is an example of the breakdown of features in a new car.

Figure 1

Prepare to Visit the Dealer

1. Find the invoice price of your desired vehicle on http://www.edmunds.com/. Note: You wil l base your f inal deal off of this price.

2. Check the manufacturer’s website for rebates.

Chapter 2 9

3. Research the dealers in your area. Note: Use online reviews, family, and friends to gain understanding of their service and business practices.

4. Obtain a copy of your credit report with the credit score from https://www.annualcreditreport.com/index.action.

5. Secure your own financing from your bank or credit union. Note: Dealers make most of their profit in their f inance department, so you can often find a better deal on your own.

6. Secure Internet quotes from several dealers. Note: This tactic wil l cause dealers to compete for your business.

7. Make an appointment with the sales manager of your chosen dealer. Note: This shows the dealer that you are serious about your purchase.

Chapter 3: At the Dealership Perhaps the most intimidating part of buying a new car is the process of actually buying it. This chapter will teach you how to negotiate and close the deal as an informed buyer.

What to Expect in the Chapter • Test Drive a Car • Recognize Dealer Tricks • Negotiate a Deal

Chapter 3 13

Chapter 3 – At the Dealership As a first-time car buyer, going to the dealership can be intimidating. However, if you follow these simple instructions, you will be in control of the situation during the process of buying your first new car. Test Drive a Car

1. Have a list of potential car candidates in mind before entering the dealership. 2. Consider bringing a second person along to keep the salesperson occupied and to

provide a second opinion. 3. Tell the salesperson you would like to test drive a vehicle.

Note: Mention that you wil l be comparing prices and models at other showrooms after this visit.

4. Inspect the exterior of the vehicle for the following: • Finish • General workmanship • Appeal

5. Inspect the interior of the vehicle for the following. • Roominess • User-friendliness

Note: It is helpful to enlist the help of your children, spouse or fr iends.

6. Drive the vehicle. 7. Think about the following things:

• Handling • Comfort • Ease of use

8. Reflect on your drive. Note: It is helpful to take notes throughout the process.

9. Drive all of your prospects back to back. Note: This wil l give you the best comparison.

Recognize Dealer Tricks

1. Refuse to talk about monthly payments. Note: Many dealers wil l inflate monthly payments, so only discuss purchase price.

14 Guide to Car Buying

2. Negotiate as if there are no rebates.

Note: Make sure any rebates are deducted from the purchase price. Rebates usually come from the manufacturer, but salespeople often try to make them a part of the deal.

3. Deny any fees offered by the finance and insurance manager. 4. Refuse any fees offered after the negotiated sales price.

Negotiate a Deal

1. Familiarize yourself with the foursquare shown in Figure 2. Note: Salespeople wil l use this to start writ ing the specifics of your deal.

Figure 2

2. Maximize your down payment. Note: Increasing your down payment lowers your monthly payment and may improve your offer.

3. Aim for a final price of 2% over the invoice price. 4. Take your time. 5. Understand each part of the deal.

Chapter 3 15

Conclusion Congratulations! You are now prepared for the car buying process. This is an exciting time and soon you will be behind the wheel of your first new car!

Frequently Asked Questions 17

Frequently Asked Questions

What time should I buy a new vehicle?

The best time to buy a new vehicle is from the 16th to 31st of any given month. In addition, the manufacturer will provide the highest rebates at the end of the model year in August or September.

Where is new car invoicing available?

You can visit http://www.invoicedealers.com to view an Online Auto Buying Tool that gives the most accurate and comprehensive vehicle pricing information.

Should I buy an extended warranty?

Most of the time, you should not buy the extended warranty. However, if you plan on keeping the car for a long time and driving over 100,000 miles, the extended warranty might be a good investment.

Should I take 0% financing or the rebate?

You should take the rebate, because you can usually secure better financing outside the dealership. However, each situation is different, so make sure to calculate the specifics of your finances.

Why should I buy new instead of lease?

Buying new will allow for greater freedom of choice. But perhaps the most significant benefit of buying new is that you will eventually own the car and stop making payments. Lastly, you will secure better financing rates when you choose to buy new instead of lease.

References 19

References

9 Car Safety Features to Look Out For | Reader's Digest. (n.d.). Retrieved August 6, 2014.

Cars.com. (n.d.). Retrieved August 6, 2014.

Everything You Need to Know About Buying a Car - Buyers Info. (n.d.). Retrieved August 6,

2014.

How to Choose New-Car Trim Levels and Options - AutoTrader.com. (n.d.). Retrieved August

6, 2014.

Tez-chan's image. (n.d.). Retrieved August 6, 2014.

When Is Leasing a Car Better Than Buying? (n.d.). Retrieved August 6, 2014.

Index 21

Index Budget, 9 Credit report, 9 Credit score, 9 Dealer Tricks, 13 Down payment, 14 Equity, 3 Expenses, 3 Extended warranty, 17 Foursquare, 14 Gas mileage, 3

Internet quotes, 9 Invoice price, 14 Maintenance, 3 Monthly payment, 3 Negotiating, 14 Price range, 3 Rebate, 17 Rebates, 8, 14 Test Driving, 13