Start by deciding, before you even shop, how much you’re prepared to spend. This is great protection against the lure of the showroom—and you’ll still be thrilled with your new car.
One guideline is to shoot for a car payment no more than 20% of your disposable income. So after you deduct all your debts and living expenses, calculate one-fifth of the balance. The best scenario is for this amount to cover your car payments as well as insurance and gas.
Now think about how long you intend to make those payments. No surprise here—the longer you pay it back, the more you’ll pay overall. Stretching the loan out reduces each monthly payment, and that can be appealing. But you will pay more in total interest.
Use the car loan calculator at sunfederalcu.org to play with various loan terms. Then be honest with yourself about the impact on your bottom line and your other financial goals. A Sun Federal CU loan officer can help you walk through this step and explain your loan options.
Arrange for a pre-approved loan with your Sun Federal CU loan officer. This means you will go to the dealership and effectively bargain for your new car with cash—the ideal way to gain leverage at the dealership while also sidestepping pressure to finance the car there.
Now, does it matter when you go shopping? Here are a few timing tips:
- Shop early in the week. Weekends are a busy time on most car lots. So say you show up on Monday—a seller could be motivated to bargain, knowing that business likely will be slack for a few days.
- Shop at the end of the month. Dealers who sell enough cars earn monthly bonuses. Show up toward the end of the month, when your salesperson is two cars shy of a bonus, and you could walk away with a nice price.
- Shop for a model at the end of its design cycle. Check websites that feature vehicle news, such as Kelley Blue Book (kbb.com) and Edmunds.com, for reporting about the "all new” models coming into showrooms soon. The last of the previous inventory is still new—but it may go at a lower price.
Your Sun Federal CU loan officer has more insider car-buying insight for you. Stop in or call (800) 786-0945 today.