When most people shop for a new car, they focus on the price. Purchase price is an important factor but there are many other factors to consider insuring the best deal possible. New car dealerships may talk about selling at invoice price to entice the customer to purchase a new vehicle but other factors are involved that can have a dramatic affect on the value. Then there’s the question of which is better, to purchase or lease a new vehicle?
What’s Better to Buy or Lease a New Car?
Determining what’s a better value to buy or lease largely depends on driving habits and personal preference. If the vehicle is driven a minimal amount of miles per year, then a lease may be a better option. Some factors depend on how fast a particular model depreciates in value.
Vehicles that depreciate fast don’t lease as well as vehicles that have a slower rate of depreciation. To find out more information read, Buy or Lease a New Car or Truck.
Trade-In Value is a Major Factor When Buying a New Car
When buying a new car many people will trade-in their old car as part of the down payment. If the dealership is selling the car at invoice price, they may try to make up the difference in profits with the trade-in. If for example the dealer offers $1,000 less that the actual trade-in value, they’ve just increased their profits an extra $1,000 when they sell the old car. Before talking to a new car dealer, find out what is the car worth?
When looking up the cars trade in value, look and see what the private party value is. Selling the vehicle to a private party (individual) will bring a higher price then trading in the vehicle. The extra money would make a better down payment and reduce the monthly payments if the car is financed.
Interest Rates and Rebates
If someone has good credit they can often purchase a new vehicle at 0% interest rate. It may seem a bit ironic when 0% (or very low interest rates) is offered, it’s usually offered with a vehicle that also has a rebate. In most cases it’s an either or proposition because the cost to the factory of the low interest rate is hidden in the selling price. If someone wants to purchase the new car for cash, the factory will sell it minus the rebate.
If someone can’t pay cash for a new car, they may consider alternative financing when a vehicle purchase has a choice between a low interest and a rebate. Shop around with some banks for the lowest interest rate. Once the lowest interest rate is found, determine what the total interest for the life of the loan would amount to. If the total interest were less than the rebate, the best value would be to take the rebate and use alternative financing.
Summary of Tips for Buying a New Car or Truck
- Compare a lease to a purchase
- Find out the value of the trade-in before visiting the dealership
- Consider selling the trade to a private party for a larger down payment
- Look at alternative financing for a better value
Using some of these tips could result in a considerable amount of savings. It’s also good practice to shop other dealers. Besides the purchase price, other dealers may have a different value for the trade-in. Shop at least three dealerships and go with the best overall purchase price, trade-in value and interest rate combined. If shopping for a used car, find out the best websites for used car listings.
James Clausen - Clausen received a Bachelors Degree in Business Administration in Automotive Management and Marketing at Northwood University, graduating ...
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