In 2022, 13.75 million Americans purchased a car, according to Statista, and most kept their vehicles for an average of eight years. Before buying your next car, you’ll want to do these three things: research, get preapproved for your loan and know when to walk away if the timing and price aren’t right.
Do You Need Preapproval?
Preapproval isn’t required when purchasing a car, but it can be beneficial.
When you’ve completed your preapproval application, and the lender shares your preapproval amount, you’ll be ready for car shopping. The preapproval letter will tell you the maximum amount you can finance, the estimated annual percentage rate (APR), the length of the term and an estimate of your monthly payments.
Having all this information handy before you start looking for vehicles can help you tailor your list to the cars you can reasonably afford, not the ones you want but are outside your budget.
Shopping Around
Bankrate.com suggests the best time to buy a car is the last quarter of the calendar year, when dealerships feel the crunch of trying to meet their year-end quotas. Advanced research is helpful when you add in the current demand and high vehicle prices.
One last tip for your research phase: Don’t reveal your preapproval maximum to the dealership. If the salesperson knows the amount, that’s what they’ll offer you, even if it’s not what the car is worth. Also be sure to compare new and used vehicles and reviewing safety ratings before purchasing.
Be Prepared to Walk Away
The best time to buy a car is when you’ve done your research and are financially prepared, as you’ll have more power in the negotiation.
When you enter the dealership with your preapproval check and maximum set price, there’s no difference between walking in with cash or this check. It makes it much easier to walk away if they can’t meet your price point.
