How To Buy the Right New Car for the Right Price

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As auto sales have taken a nosedive, dealers are offering incentives and rebates to lure in customers. Those deals -- combined with lower interest rates -- create a great environment if you're in the market for a new car.
Still, there are always pitfalls to be wary of and strategies to save more. Here are some tips to buy the right car at the right price:

1. Decide what type of vehicle fits your needs, lifestyle and budget
If you're single and don't cart around a lot of stuff, an SUV such as a Cadillac (GM) Escalade might be impractical. If you've got a family of five, a Jaguar (F) SK sports coupe doesn't make much sense. If you're on a tight budget, a luxury car like a Maybach (DAI) is probably over the top.

2. Don't rationalize an expense that is far beyond your budget
Before looking at the latest models, figure out how much you can afford each month and stick to the plan. Make sure to factor in monthly payments, insurance, maintenance and gasoline

Online calculators can help. BankingMyWay.com gathers the best local interest rates and its auto-loan calculator figures out how much monthly payments would be. Metrotransit.org's calculator estimates expenses for other items like fuel and parking.

3. Shop around on the Web
Dealers and insurers offer rebates, incentives and specials online that you might not find elsewhere. You can use that information to negotiate better terms in person or over the phone.

Keep in mind there is always fine print -- advertised prices are often lower than what you'll actually pay. For instance, Toyota (TM) advertises its 2009 Camry starting at $18,720. But if you can't drive a stick shift, the price actually starts at $19,770. That figure doesn't include fees, taxes or accessories that can add up to hundreds or thousands of dollars.

4. Buy at the right time
The end of the summer and end of the year often have big specials because showrooms have to clear inventory at those points.

5. Try to avoid a down payment for a lease unless it lowers your monthly payments
Otherwise, "you never get that money back -- you're just sort of throwing it away," says Vincent Barbera, director of financial planning at TGS Financial Advisors.

6. If you're offered either cash back or a lower interest rate, choose the latter
It might not offer a quick payout, but it saves you more over the life of the loan. "Cash back is more enticing," says Barbera, "but a lower interest rate has longer-term benefits."

7. Be aggressive.
When heading for the dealership, arm yourself with information and be prepared to negotiate. If you want to avoid showroom confrontation, you can often discuss terms via email or phone.
Most of the time, sales reps will ease up as long as the deal is still profitable, says Kyra Morris, a financial advisor at Morris Financial Concepts.

"If you give them 10% profit to low 20% profit, they're probably willing to work with you," she says. If not, don't be afraid to walk away from the car of your dreams -- there are other vehicles and dealerships.

8. Don't get snookered into snazzy, but superfluous, extras
They might look nice, but probably aren't worth the cost. If you must have the spoiler, weatherproof mats or GPS system, you can often get aftermarket items at a much lower price.

 

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