Updated on July 25, 2021
You’re in the market for a new – or perhaps a new-to-you – car. So, where do you start? You probably know the best deals go to educated buyers. And whether you’re purchasing your first car or are a seasoned buyer, there’s always something to learn.
To give you a competitive advantage on finding the best vehicle and facilitating an easy transaction, we’ve compiled a comprehensive guide that covers what you’ll need to know. From finding the best deal to negotiating a final price, these tips will help you improve your strategy. Informed consumers are smart consumers, so let’s start at the very beginning.
Before you set foot in a dealership or do your first online search, you must narrow your focus and be clear on what, exactly, you’re looking for. You’ll probably already have a make and model in mind. Next, ask yourself these important questions.
You know what your dream car is, but do you know if you can afford the price tag that comes with it? Any car you pick needs to fit within your budget. One easy way to determine the maximum amount you should spend on a car is by calculating 10% of your monthly income – that amount should be your maximum monthly car payment. Keep in mind that this number doesn’t include routine expenses like insurance, maintenance, and fuel. Although this percentage isn’t absolute, it gives you a solid idea of what you can expect to spend comfortably each month.
Use our free calculator to see how much car you can afford.
One decision you’ll need to make early on is whether it’s better to buy or lease a car. The differences between buying and leasing are significant. Let’s look at a few of them.
| Buying | Leasing | |
| Ownership | You own the vehicle and can keep it as long as you want. | You must return the vehicle at the end of the lease term, unless you make arrangements to purchase it. |
| Monthly Payments | You may pay for the car in full when you buy it. You might also take out a loan and make monthly payments. The loan payment is usually higher than a lease payment because your payments include the purchase price, taxes, and other fees. | Your monthly payment is based on the vehicle’s depreciation in value while you’re using it, plus any interest, taxes, and other fees. |
| Mileage | You can drive the car as many miles as you’d like. | Most leases cap the number of miles you can drive. You can exceed that amount, but you will likely have to pay per-mile charges for the miles in excess of the cap. |
| Future Value | Although the car depreciates in value over time, the depreciation will vary depending on the car’s condition. However, the more payments you make, the more equity you have in the car. | The car still depreciates, but the future value of the car has no effect on you. You also have no equity in the vehicle, so you have nothing to leverage. |
According to research, If you’re thinking about taking out a loan for your car, consider the length of the loan. As your car gets older and its mileage increases, its value will go down. Taking out an auto loan longer than 50 months can result in your car’s value depreciating faster than you can pay down your principal loan balance. Longer loan terms can be tempting to get your monthly payment where you need it to be, but you’ll pay more in interest, and you may end up owing more than your car is worth.
If you opt for a loan, you may want to get a preapproval about two weeks prior to car shopping. This will give you an idea of how much you can afford and will potentially give you some room for negotiation at the dealership. And before you sign on the dotted line, make sure you’ve compared terms and rates among various financial institutions. Credit unions are a great place to look for a car loan and are often able to offer competitive rates.
You can get prequalified for an auto loan with PSECU quickly – usually within the same day you apply. Once you’re approved, we’ll mail you an AutoDraft, which is like a check written for a preapproved amount that you can use at any authorized dealership. You’ll complete a few pieces of information, like the repayment frequency and term. The dealer will take care of the rest. This will help avoid any last-minute surprises – like unexpected interest rate increases or being denied for financing – that may impact your ability to purchase a vehicle.
In Pennsylvania, the purchase price of the car won’t be your only expense. You’ll also need to consider these fees:
The answer is different for everyone. Answering these questions may help you determine whether buying a new or used vehicle makes the most sense for you:
If you’re looking for a new car, you’ll likely head straight to a dealership to make your pick, but if you’re in the market for a used car, you have more options available to you. Where you purchase a car may also have an impact on its cost.
Timing is everything when it comes to buying a car. The best time of year to buy can depend on whether you’re looking for a new or used car:
Beyond thinking about the best time of the year to shop, also consider the best days of the week – and even time of day. Consider visiting the dealership toward the end of the month or the end of a quarter, when salespeople might be more motivated to make deals in order to meet sales quotas. Go early in the week when the influx of weekend shoppers has dissipated, and visit at the end of the day when salespeople are eager to close a deal and get home.
By simply adjusting the time of day, month, and year you go car shopping, you might be able to save several hundreds or thousands of dollars off the price of the car.
If you’ve decided to go the used car route, you’ll need to think about where you want to buy your car. Used cars are available from private parties, dealers, and auctions. But no matter where you get your vehicle from, there are several things to look for to ensure you’re getting a good car and a good deal.
Buying a used car can be a nerve-wracking experience if you aren’t prepared. But while you’ve probably heard plenty of horror stories, there are just as many success stories. Do your research, and have a complete understanding of the car you’re looking at.
Here are some tips to keep in mind so that you don’t end up with a lemon:
Buying a used car from a dealer often lends a little more confidence in your purchase, but it doesn’t mean you’re absolved of doing your due diligence. If you’re considering buying a dealer’s used car, make sure you:
There are two types of auctions: government and public. How much cars will sell for at auctions varies widely, but cars at government auctions will often sell for much more than at public auctions, where the cars aren’t guaranteed to be as well-maintained.
Both are ways to get a great deal on a car, if you know what you’re doing. Buying a car at an auction comes with risks. You won’t be able to test drive or inspect the vehicle before purchasing, and you’ll also be competing with dealers who know all the tricks in the book. Typically, all vehicles are sold “as is,” so you won’t have any recourse if the vehicle isn’t what you expected. The risks of buying from an auction can quickly outweigh the potential savings.
Be wary of a vehicle you purchase from a private party. Many used cars sold via online classified ads are from curbstoners – those who repeatedly flip used cars for profit. Consider the following tips:
After you’ve taken a look at a used car and decide you want it, it’s time to negotiate the price. To get the best price, follow these tips:
Before you set foot in a dealership, get as much background information as you can on the car, the dealership, and any special offers that might be available. Most people go into a dealership knowing the car and the features they want. Walking into a dealership armed with confidence and information gives you a strategic advantage as you negotiate.
Just as you would with a used car, you should be prepared to do your research and understand what a fair price is for a new car. Before you sign on that dotted line, learn what you need to do to buy a new car:
| Ensure your financing is in order. Understanding how much you can afford and being preapproved for a loan will go a long way in making the purchase process a seamless one. | |
| Compare interest rates before the dealer makes you an offer. Dealers often increase your interest rates several points over the rate for which you qualify. That’s why it might be better to get your loan directly from a financial institution like PSECU instead of the dealer. | |
| If you plan to pay with cash or check, make sure you have the money in your checking account. | |
| Do your online research. Are there any special financing rates online from your manufacturer, or are there other special incentives that you qualify for? | |
| See the car in person first, and take it for a test drive. Even when buying a new car, this is important. Does it handle the way you expect? Does it have all the bells and whistles you want and need? | |
| While shopping around for the right car, take detailed notes about the pros and cons of each car. Take pictures with your cellphone so you can remember the visual details of each. Make sure the car you want is available locally. | |
| If you have a trade-in, make sure you know the value of your current car. Dealers won’t always give their best offer at first, so it’s important to be knowledgeable. If you think they aren’t giving you what you deserve, don’t be afraid to walk away and go to a different dealer. |
Once you determine the kind of car you want, research pricing for cars online. Take note of the price range of the vehicles. You can also request online quotes from local dealers. Review a car’s True Market Value (TMV®), which gives you the pricing of a new car, the invoice price of the car, and the manufacturer’s suggested retail price. It also lets you see what other people in your area paid for the same car.
Keep in mind the prices you see online at dealerships might not reflect the total cost of the car. Dealerships may advertise vehicles at a lower price to get customers to the lot. Before taking the time to drive to the dealership, call to confirm the true cost of the vehicle you’re interested in.
If you don’t feel confident negotiating with a salesman, consider bringing a family member or friend along you trust who has strong negotiation skills.
Don’t be shy about negotiating. Use the competitors’ quotes you’ve received to bring down the price. Before you begin the negotiation, ask to see the official vehicle invoice. Often, salespeople will combine several transactions into one, such as the down payment, trade-in value, monthly payments, and total cost of the car. However, you may be able to get a better deal if you negotiate each transaction separately.
After you feel prepared to negotiate the new car price, don’t hesitate to ask for extra perks – like free oil changes, inspections, or car washes. This is where that official vehicle invoice comes in handy. Look for line items not listed on the invoice that you originally wanted. You can also negotiate the prices of the “add on” products the dealership offers, such as extended warranties and paint protection. You’ll also want to look out for dealer prep fees or additional dealer markup fees and request they be removed before you end your negotiations. A word to the wise: Be absolutely sure about the car and the terms you’re buying it for. Unlike some other states, Pennsylvania does not have a “cooling off” period for buying a car.
If you bought a new car, it should be clean and the gas tank should be full. Make sure that no dents, scratches, or other damages have appeared from the time you last saw the car. If you find damage that you don’t remember, pull up the photos you took of the car when first shopping around. In some instances, you may not get the same car you test drove. An example of this is if you wanted a specific color that the dealership didn’t have on the lot and had to do a trade for. Make sure you have the chance to check it over, and make sure it’s comparable to the one you originally saw.
Before you leave, the salesperson should give you a tour of the car and show you its features. Come prepared to ask any remaining questions you have about the car’s functionality.
Now that you have a better understanding of how to buy a car, it’s time to get started.
We want to help make the car buying and leasing process as simple and stress-free as possible. Check out our auto loans to see the competitive rates we offer members. Whether you’re buying new or used, we offer the same low rates. With an AutoDraft, you’ll have a check to take in hand when you go to any authorized car dealer. They’ll take care of the rest. Apply online, and you’ll get an answer usually within the same day you apply.
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