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4 Things to consider when buying a car

Trade-ins, payments, purchase price and down payments: These essential elements can help you find the right car for your needs and wants.

There are a lot of factors to consider when buying a car, from monthly payment to loan rate and trade-in value. Here are four strategies to help you be more successful in the car buying process.

If You Want To Get A Lower Purchase Price... Don't Discuss a Monthly Payment

It’s a common scenario: A car buyer looks to buy a new car from a dealership and tells the sales representative that he or she has a certain amount — say, $300 or $400 — budgeted for a monthly payment. At this point, the salesperson knows that he or she may be able to sell a new or used vehicle to the customer for almost any purchase price, as long as the monthly loan payment falls within the budget. While it definitely makes sense to have an affordable monthly payment amount in mind, don’t share it until after you’ve negotiated the purchase price, which is what you’re actually paying for the vehicle. You may be able to lower your payment by stretching out the life of the loan, but make that decision once you’ve already agreed on the purchase price of the vehicle.

If You Want To Be A Better Negotiator... Ask Around

Ask several dealers for their best “out-the-door” price, including sales tax and any additional fees or discounts. Then use the lowest number as leverage with other dealers by asking them to beat the total. This takes time, but it gives you a measure of control over the negotiations and may help you lower your purchase price.

If You Want To Lower Your Loan Total... Increase Your Down Payment

Once you’ve settled on a final purchase price, you can lower your monthly payments by putting more money down. A larger down payment (typically 20 percent or more of the purchase price) may also help you lower your interest rate and could prevent a scenario where you owe substantially more for your vehicle than it is worth.

If You Want To Get More For Your Trade-in... Negotiate It Separately

How does trading in a car work, generally? You negotiate the purchase price, then the dealer tells you what he or she will give you for the trade-in. However, you can flip that setup: Don’t even mention that you have a trade-in as you begin discussions. Instead, solidify your vehicle purchase price. Then negotiate the trade-in separately from the vehicle purchase. Otherwise, dealers can simply lower their trade-in offer anytime they take money off the sticker price. Start the trade-in process by consulting vehicle price guides and use several resources to get a firm quote.

State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, any third party products or the content of any third party sites referenced in this material. State Farm has no discretion to alter, update, or control the content on the third party sites. Any references to such sites are provided for informational purposes only and are not a solicitation to buy or sell any of the products which may be referenced on such third party sites. State Farm does not warrant the merchantability, fitness, or quality of the third party products referenced in this material.


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