2016 started off with a bang for the automotive industry with car sales increasing by 27.6% this January 2016 compared to January of last year. Furthermore, the demand for cars is expected to stay strong with the automotive industry forecasting to hit record sales this 2016, up to 350,000 units from 310,000.
With more Filipinos expected to buy new vehicles, especially with the popularity of compact cars and SUVs, shopping for a new car can be a tiring yet exciting process. To help you with that, MoneyMax.ph, gives you 5 tips for buying a car:
Know your parameters
You may get too excited about buying a car. You’re going to be driving it; it’s going to be your ‘baby’, and finally, you can get that SUV or sports car you’ve always dreamt. Hold up! Before you jump from dealer to dealer and look at those shiny, new cars, know your parameters first.
What’s your budget?
What car classification suits me best?
Should I buy a new or a used car?
Those three are some essential questions you should be asking yourself. Having a specific number keeps you grounded. You may have dreamt of owning that luxury SUV until you realize that it’s too expensive and you may not be able to afford the down payment and monthly loan payments. As for vehicle classification, decide what type of car suits your lifestyle best. If you have a family of six, then a minivan is more appropriate than a four-seater sedan. As for buying new versus used, if you want that luxury SUV, you can get a better deal buying it used. MoneyMax.ph has an article specifically on the ever-popular debate – buying new vs second-hand cars. It’s important to know your parameters so you can keep yourself and spending impulse in check.
As with anything, it’s always best to do your research first. Researching allows you to get the best deals by scouring the net and comparing all your available options. Researching also allows you to set a benchmark, so when you go out and start to negotiate with a salesman, you know if the ‘discounted price’ he’s giving you is really a discount. However, research isn’t only limited to the price of the car, you can research your financing options and use the internet to look for a car loan offering the lowest interest rates.
When it comes to car insurance, MoneyMax.ph has a comparison portal that lets you compare insurance rates from different providers. Knowledge is power, and research gives you exactly that. You have the power to walk away if the car you’re being sold is overpriced. In the same way, you have the power to negotiate a better deal when you know another dealership will offer you the same vehicle for less.
Know your financing options
Before you get too excited about car shopping, it’s best to know your financing options first. Usually, dealerships have partnerships with banks, or will offer you in-house financing; however, the interest rates on in-house loans is higher if you applied for a loan separately. Before you walk into a dealer, it’s best to know car loans rates from outside. With this, you will also know your budget as determined by the maximum loan amount the bank will give you.
You know you need to negotiate on the deal, but how exactly should you do it? The key here is to know your number.
What’s the maximum you can spend on a car?
Knowing your number will give you the strength to walk away when the price is too high. In the same manner, knowing your number will allow you to negotiate for a better deal; however, negotiating too low can hurt you. There’s also a limit to how big of a discount salespeople can give you. In addition, it’s best to be patient. Don’t jump at the opportunity to get a 1% discount. Sleep it through. Let the other party know that you’re not in a rush to close a deal and that you can look elsewhere. That might just do the trick. Others may give you the number you want just to close a sale and hit their quota. Remember, first, what your number is, and second, that it pays to be patient.
Test drive the car
In a survey conducted by research company DMEautomative of 2,000 consumers, 16% of car buyers do not go for a test drive. Don’t be part of the 16%. There are different cars for different people and going for a test drive allows you to find the car that fits you best. An SUV is a cool car to drive but if you’re a beginner, you may have a hard time parking and going out of the parking space because of the large and bulky backend. Also, some sedans are much lighter than others. If you don’t like your car turning at the slightest steer, then you can opt for a heavier sedan. Going for a test drive allows you to look for the car that best suits you as a driver.
Car ownership is a milestone because of the responsibility that comes with it. You need to take care of it and have it regularly checked. In addition, the financial implications of owning a car cannot be discounted as well, so before you go out and buy a car, always be ready. Use the 5 tips above when buying a car.