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Is the car that you are driving costing you more to fix than what it's worth in the Kelley Blue Book? Then it might be time to invest in driving something new. This guide will serve as a checklist as to what you should know and take into consideration when you are at the auto dealer. Questions to ask yourself
  • Do I want a new or used car?
  • Do I need a car or a truck?
  • How much per month can I spend on the car payment?
  • What would my primary use for the car be?
  • What are my personal preferences in what I decide to drive?
The above questions will often determine what make and model of car that you will end up buying. If you live in a rural area and need to haul stuff on a frequent basis, a truck with a V6 or better engine and 4WD would be a good candidate. In my case, I spend a lot of time on the road commuting, so I need either a new car, or a used car that has low mileage and good fuel economy.

The most critical question is the third question in the above list. A good way to gauge how much your maximum payment should be is to take your monthly net income, and factor 25% as being for the car payment. A person making $1000 a month net would not want to spend more than $250 per month on repaying a car loan.

One way of getting more car or truck for your money is to do your homework on what's available. Your best friends in your car shopping quest would be a reputable salesperson and your auto mechanic (especially when buying used cars). If you are fortunate enough to have a family member employed by the dealership you want to buy from, you could be able to purchase your car at dealer invoice instead of list price. One drawback to this is that if you are a Chevy person, only way you can get a Chevy off a Ford lot is if it was acquired by the dealer in trade on a Ford. Take note of the time of year when you go shopping. At the end of a month, you may be able to get a good deal because the salesperson may need to sell one or two cars to meet his/her quota to keep his job or to earn a bonus. If there is an auto show going on nearby, the manufacturer may throw in a rebate. At the end of the year, many dealers are anxious to unload their inventory because it will mean less taxes they would have to pay on that inventory. Using myself as an example, there is an auto show going on, and GM is offering $2000 rebates or 3.9% financing for 60 months on 2002 GM models. GM also offers rebates for recent college graduates on new GM cars, so the total rebate is around $3000.

99% of the time, someone would be trading in their currently owned vehicle on the new purchase. The dealer will want to inspect the car to appraise its condition and quote the trade-in value according to the Kelley Blue Book. You should have your mechanic do the same and use his findings to appraise the value of your car at the Blue Book website at www.kbb.com. You may be able to get more for your trade if you show them your findings on the car.

Your payment will be based on the difference between retail price of the car and how much was deducted from rebates, trade, and any down payment. The remainder is what you will be financing through either your bank or through dealer financing.

If you ultimately decide on going with a used car, then the following information is very useful. First thing you should do before buying the car is to have your mechanic inspect it. He can look at and under the car and determine if any body work was done with it, if all the parts are original, and assess the overall condition of the car. Before you take the car back to the dealership, write down the VIN number of the car and stuff it someplace safe. You'll need it in the next step below
After returning to the dealer with the car, offer to the dealer that you are still looking and you'll decide later if you want to purchase the car. Go on home and log into Carfax at www.carfax.com. Use the VIN number that you wrote down earlier (you did remember to write it down, didn't you?) to find out the vehicle's past history. Carfax can give you a detailed listing of all public records on the vehicle, including title history and accident reports. For $20, this can save you a lot of money, especially if the car has a salvage title or is classified as a lemon.

After researching the car and having it inspected, make your offer to buy the car. If your mechanic finds some defects and your Carfax report shows any accident reports, make an offer that is below what is advertised. After making the offer, show them your reports and explain what the mechanic found. If the dealer does not budge, then it's time for you to look at another car.

Overall, buying a car may seem to be a hassle, but in the long run, knowing what you are doing will save you a lot of money. If this is your first time buying a car, I would definitely recommend having someone else who has experience in negotiating with the dealers with you when you shop around.

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