Get preapproved
There are two great reasons to get bank preapproval for an auto loan before you go shopping. First, the loan amount you can get from a bank or credit union can help you determine how much you can afford to pay for a vehicle. Second, it can give you a good idea of the interest rate that’s available for someone with your credit rating. Even if you decide that a loan obtained through the dealership is a better offer, with a commitment from a bank in hand you may be able to negotiate a better deal on the car or get a reduction on the dealer’s interest rate.
Do your homework on price
Check online sites that report invoice prices and average sale prices for different vehicles. With those ballpark numbers in hand, contact several dealers and ask their total price for the car that interests you. Confirm that the price they quote includes all taxes, fees, and any add-ons or options. If you’re interested in an extended warranty, prepaid maintenance plan, or other additional service, ask what they’ll cost beforehand so you have time to decide if they’re worth taking. Be aware that you may be able to find some of these services from other sources as well. Use the pricing information you’ve gathered to choose the dealer with the best offer or to negotiate a better price from another dealer.
Also consider contacting the dealership beforehand to save time. While many dealers will evade discussions of price and insist you come in, there are some who will provide a ballpark estimate of your monthly payment based on your credit score and other factors. This proves especially valuable if you use a budget.
Don’t overlook discounts
Some automakers or dealerships may have special discounts for members of the military, students, or other groups. You can find out more by looking online or asking dealers about what they offer.
Consult your local CPA
Every day, local CPAs offer clients expert advice on a wide variety of financial concerns, including making a major purchase or obtaining a loan. Whatever your financial questions, your CPA can help you find the answers. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife.
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