Buying a new or used car can be a really stressful time for many especially when not trying to get ripped off at dealerships with hidden fees and cost add-ons that raise the price of the vehicle. Given the current car buying environment of a vehicle shortage due to a chip shortage and many vehicle making plants around the world facing COVID restrictions used cars are being sold at new car prices and new cars are being sold way above average pricing. Here is a lot of good information to arm yourself with when going car shopping from a person who used to work in the auto selling industry- Kevin Hunter The Homework Guy.


Kevin Hunter The Homework Guy Video Playlist https://www.youtube.com/channel/UCJ6Su-8bINvXVXWf0peAIJg



Gw-j3gVdEsc

Kevin Hunter The Homework Guy: Are car prices dropping in 2021? Not yet. Why the increase in car prices in 2021?
CAR DEALERSHIP PRICES ARE DRIVEN BY CAR BUYERS. DON'T LIKE Paying too much for a new or used car? YOU CAN FIX IT! Wait to buy until PRICES ARE BACK IN LINE!


-eG-OueDFz4

Kevin Hunter The Homework Guy: 20 QUESTIONS: NEVER ANSWER A BAD CAR SALESMAN AT CAR DEALERS. CAR SALESMEN WILL ASK YOU SEVERAL QUESTIONS THE MOMENT YOU ARRIVE AT THE DEALER. Questions that only self absorbed Salesmen at Car Dealers will ask you. DON'T ANSWER!


gQzq-M75mxg

Kevin Hunter The Homework Guy: How to Buy a Car Without Getting Ripped OFF...7 Salesman Strategies to beat the dealership. Car Buyers don't want to get ripped off. THG exposes 7 ways car salesman train to boost their profits and take more of your money. CAR TRAINER ANDY ELLIOTT (REACTION) SHARES 7 STRATEGIES TO HOLDING "GROSS" FOR A CAR SALESMAN. AS A CAR BUYER, THIS IS "MUST KNOW" MATERIAL. CHECK IT OUT!


8KSmB3HE90E

Kevin Hunter The Homework Guy: CAR LOANS CAN BE THE SOURCE OF TONS OF HEADACHES, BUT THEY DON'T HAVE TO BE! Get Pre-Approved for your NEXT CAR LOAN from your own Bank or Credit Union before you go car shopping!


s8EASWCiQpM

Kevin Hunter The Homework Guy: CAR SALESMEN ARE TRAINED TO CONTROL YOU. YOU DON'T WANT THAT. HERE ARE 10 THINGS YOU SHOULD NOT SAY to Car Dealerships or a Car Salesman. Stay in Control of your own car deal! Don't make these MISTAKES!


8hWyaHlRqUA

Kevin Hunter The Homework Guy: CAR BUYERS WHO PAY CASH ARE VERY SAVVY. EXPERT NEGOTIATOR ELIZABETH STRIKES AGAIN WITH MASTERFUL TECHNIQUES! "THE BOSS" IS BACK for this 3RD EDITION! Watch the Dave Ramsey Show and he'll tell you that you should pay cash for your next car. Great advice, just don't tell the dealership that up front! Why? They WANT you to have a Car Loan!


TqaSyeG9IIs

Kevin Hunter The Homework Guy: 11 FAKE CAR FEES: DO NOT PAY at CAR Dealerships. CAR SALESMAN (EX) SHOWS HOW CAR DEALERS ARE FAMOUS FOR PADDING CAR DEALS WITH FEES! How Car Dealerships Rip You Off (The Truth).


tLb7chHyS7Y

Kevin Hunter The Homework Guy: 7 NEGOTIATING STEPS with DEALERSHIPS - Beat the Car Dealer Finance Manager. HOW TO BUY A CAR. HOW TO NEGOTIATE. TIPS ON CAR BUYING. It's all in this video!


22Yi-n-rQko

Kevin Hunter The Homework Guy: CAR BUYER WITH CASH? OR GOT A PREAPPROVED LOAN? Car Dealers are notorious abusers of Consumer Credit Rights, and they can RUIN your Credit. You DON'T have to put up with it! If you're paying cash, or have your own financing, you DO NOT need to fill out credit applications.

Old School - Why, you don't know? Why is Everything so sky high? When auto prices started to go crazy I compared them to the price my parents paid for their house. Glad I had to stop driving and sell auto, due to my damaged body and don't miss that expense for a second.

Car And Driver https://www.caranddriver.com/features/a22652499/car-dealerships-donts/

https://media.paruvendu.fr/cms/pictures//2020120111435663.jpg

A lot of people will offer hints on what to do in the dealership when it comes time to buy a car. And tips on test driving, negotiation, and financing are valuable. But the path to a car purchase is so strewn with boulders that if you don’t watch your step, you can stub a toe or even break a leg, metaphorically speaking. Car buying can be such a complicated process that knowing what not to do in the dealership might be even more important than knowing what to do.

If you do one or more of these seven things we advise against, it will make getting a good deal harder. Don’t make things more difficult for yourself. You want to land the right vehicle for the best possible price, so here’s what you should not do when you visit the dealership:


1. Don’t Enter the Dealership without a Plan

You can stroll into a restaurant without knowing what you want to eat and get a good meal. You can wander into a big-box store just to kill some time and walk out with a decent microwave oven or button-down shirt. But if you mosey into a car dealership lacking a plan, there is a good chance you’ll come out with a crater-size hole in your bank account. Not only that, your misspent Saturday morning could haunt you for years to come. A car purchase should not be an impulse buy. Know—don’t guess, know—what your current car is worth, what the car you plan to buy is selling for, how much money you can put down, and how much money you can spend on a monthly car payment. If you know all this going in, you’ll be way ahead of most car buyers.

HOW TO BE IN AND OUT OF THE DEALERSHIP IN LESS THAN AN HOUR https://www.caranddriver.com/news/a14533470/how-to-make-a-satisfying-car-purchase-in-an-hour-or-less/


2. Don’t Let the Salesperson Steer You to a Vehicle You Don’t Want

Typically, a dealership is always trying to sell the vehicles it has in stock, Fuller told us. And that is not always in the best interest of the customer. “If the salesperson really knows the inventory, then he or she is trying to match up the customer with something that can be sold today,” Fuller said. If you are not specific and firm about what you want, the dealership will attempt to put you into a vehicle that it’s trying to move, even if it isn’t what’s best for you. Don’t let yourself be sold a car.

SHOULD YOU ORDER YOUR NEXT CAR OR BUY FROM DEALER INVENTORY? https://www.caranddriver.com/features/a20886073/should-you-order-your-next-car-or-buy-from-dealer-inventory/


3. Don't Discuss Your Trade-In Too Early

It’s almost always possible—with time and effort—to sell an old car privately for more than the dealer offers in trade. Many buyers nevertheless find the convenience of driving their old car in and their new one away compelling. If that’s your aim, research the value of your trade-in beforehand but decline offers or pressure to discuss it until after you’ve settled the price on the new car. If it turns out that you’re “upside down” on the old car—that is, you owe more money on it than you’re getting in trade—you probably don’t belong in a new-car dealership yet. At the least, the car should be sold privately to pay off the debt. Yes, the dealer will offer to roll your old debt into a new loan. But that's not a good idea.


4. Don’t Give the Dealership Your Car Keys or Your Driver’s License

It is almost as anachronistic as a pocket watch, but some dealers—happily fewer than ever before, according to Christopher Sutton, vice president of automotive retail at J.D. Power—still engage in tactics designed to keep you in the showroom until a deal is made. A couple of the tried-and-not-so-true tactics revolve around test-drive vehicles. Before a test drive, the salesperson might ask for your car keys and/or your driver’s license “as security.” Then, when you return and want to leave without buying, the car keys or the license will go missing. “We don’t see it that much anymore,” Sutton told us, referring to abusive dealer tactics. “And I think the advent of ratings and reviews online . . . has contributed to that.”

Yes, a wise dealership needs to determine that you have a valid driver's license before allowing you to take a car out for a test spin, but they don't need to take it from you and hold it as some sort of deposit. It should be enough for them to know your identity and your address. Since you have typically parked your own car at the dealership, there is the strong likelihood you will return. Further, when you go on the test drive, it is obviously good for you to have your driver's license in your possession.

HOW TO TEST DRIVE A CAR https://www.caranddriver.com/shopping-advice/a15105213/how-to-test-drive-a-car/


5. Don’t Let the Dealership Run a Credit Check

If you are going to finance your new car with a loan, the dealer will have to run a credit check eventually, but don’t agree to this before you are well on your way to completing a deal. A full-on credit check, also known as a “hard pull,” can negatively affect your credit rating. There is no point okaying a credit check and risking a ding to your credit if you’re a long way from buying.

MORE DEALER LINGO https://www.caranddriver.com/news/a15371219/are-you-a-stroker-what-car-salespeople-call-you-behind-your-back/


6. Don’t Engage in Monthly Payment Negotiations

Remember, you’re in the dealership to buy a vehicle, not to wedge a vehicle payment into your monthly budget. If you started with a plan that includes the maximum price you will pay for the vehicle based on your own affordability limits, the monthly payments should be a byproduct of the negotiation. “Problems arise when the customer is backed into a corner because he or she wants more vehicle than he or she can reasonably and rightfully afford,” Fuller said. “To make the deal work, a typical solution is to drastically extend the duration of the payment schedule. Maybe the customer can afford $500 per month, but at 60 months, that payment won’t work. So the dealer bumps it to 72 or 84 months. This is a really bad idea for the customer.”

HOW TO NEGOTIATE LEASE PAYMENTS https://www.caranddriver.com/shopping-advice/a15595299/how-to-negotiate-your-next-new-car-lease-like-a-pro/


7. Don’t Feel You Have to Buy Right Now

For many people, purchasing a new car is a stressful experience, so they try to get it over with as quickly as humanly possible, and that can lead to negative results. In their eagerness to get through it, they don’t consider their options carefully or negotiate skillfully. (For instance, walking away is an excellent negotiating tactic that you might hesitate to employ if your priority is simply getting the deal over with.) While dealer personnel will often put pressure on you to buy now, using gambits like, “I can only give you this price today,” you are very well advised to take your time. Today’s new-car market is hotly competitive. There is absolutely no reason to feel rushed by a limited-time offer; odds are that an offer just as good, or better, will be available tomorrow.

BEST TIME TO BUY A CAR https://www.caranddriver.com/shopping-advice/a16638828/winter-best-time-to-buy-car/

Heed these warnings, and your path to a car purchase should be far less strenuous. And you’ll be in better shape—financially, and maybe even emotionally—once the deal is done.

Money Crashers https://www.moneycrashers.com/how-to-buy-car-tips/

https://cars.usnews.com/pics/size/640x420/images/article/201903/127994/1-martin-dm1_640x420.jpg

Important Tips for Buying a Car

Follow these tips for buying a new or used car, beginning well before you ever set foot in a dealership or complete your online vehicle purchase.

1. Do Your Research

Knowledge is power. Arriving at a car lot without first researching the car you want to buy is a mistake. You can find out just about anything you want to know about a car online. Edmunds.com, Consumer Reports, and Kelley Blue Book (KBB) are great places to start researching cars in your price range.

If you’re considering buying a new car, your goal is to find the “invoice” price, not the MSRP. The “invoice” price is what the dealer paid the manufacturer for the car. This research will come in handy once the price negotiations begin.

If you’re thinking about buying a used car, research the recent resale prices for that specific car model. This data will give you major bargaining power. If you plan to trade in your current car, research market values for your vehicle too. Knowing the value of your trade-in can also be a powerful bargaining tool.

2. Look Into Prefinancing Options

Many people obtain financing from the car dealership, but this isn’t fiscally responsible. Dealership interest rates are typically much higher than loan rates from banks and credit unions, even in a low-rate environment. Your bank or credit union is one of the best places to start researching car loan rates, and you can obtain “relationship discounts” you won’t find anywhere else.

To obtain multiple financing quotes at once, use an aggregator like LendingTree, which compares up to five competing quotes at once. Use Credit Karma to check your credit score beforehand and get a sense of the interest rate you’re likely to qualify for. If your score comes in lower than you’d like, consider putting your car purchase on the back burner and working to improve your credit and pay off debt.

While you’re at it, sign up for Experian Boost. This free program may boost credit scores derived from your Experian credit report by considering beneficial information that usually has no impact on your credit score, like on-time utility payments.

Once you obtain a quote from any financial institution, get it in writing. You can then present this quote to the dealership and use it as leverage to negotiate a lower interest rate.

3. Shop Around

Unless it’s an emergency, shop around before you buy a car. I have an established rule whenever I shop for a car: I always make sure that I walk out of at least one dealership. This way, I always know their rock-bottom price, which they often give me just before I leave.

It might also make sense to explore out-of-town car dealerships. Dealerships price their vehicles differently depending upon their location.

Once you’ve settled on your vehicle make and model and know where you plan to purchase the car, use a reputable valuation resource like TrueCar to get an accurate estimate of what you should pay for your new or used car. Double-check TrueCar’s pricing using at least one other reputable resource, like Kelley Blue Book. Both TrueCar and KBB (and some of their competitors) sell new and used cars, either directly or through partnerships with dealerships and direct-to-consumer sellers.

4. Utilize the Internet

It’s easier than ever to buy a car online through websites like Carvana, and the process has three significant benefits.

First, you completely avoid the hassle of dealing with annoying salespeople. It could also help you avoid a negotiation misstep that results in your paying more than you should.

Second, you could end up with a much better final price due to the fundamentally different incentives inherent in the online car-buying process. A salesperson on the showroom floor is trying to negotiate the highest price possible since their commissions depend on a percentage of the sale price. By contrast, an Internet sales manager typically makes a fixed salary and gets paid a bonus based on volume.

Finally, purchasing a car online is more convenient than visiting multiple dealerships. At this point, virtually all reputable dealerships list current inventory on their websites and third-party sites, and they welcome Internet sales. And nondealer outlets like TrueCar, KBB, eBay Motors, and their direct-to-consumer sales partners are all excellent options with impressive new and used car inventories. You can also find used cars for sale on Craigslist, but be mindful of common Craigslist scams.

Fair warning: If you do decide to buy a used car online, you should still test drive the car and have it checked by a mechanic to make sure there are no issues or problems.

5. Buy a Car You Can Afford

If you’re considering buying another car before your current vehicle is paid off, you should seriously reassess whether or not you can really afford to buy another car. You don’t want to be saddled with an upside-down car loan.

A much better option is to wait until your current vehicle is paid off. Then set aside the money you used to put toward your monthly car payment in an interest-bearing account for one year while continuing to drive your old car.

For example, if your current car payment was $300 per month and you follow this strategy for just one year, you’ll have more than $3,600 to use as a down payment on your next car. Just make sure you’re not digging into your savings or your emergency fund to buy a top-of-the-line car. Buy within your means.

Pro tip: If you don’t plan to drive your car every day, you can sign up for Turo. Turo is a car-sharing platform that allows you to earn extra money, helping you cover your monthly car payment, just by sharing it with other drivers. Sign up for Turo and see how much you could earn.

6. Negotiate Terms

To me, buying a car is either a chess match or a war. Next to buying a house, purchasing a new car is one of the most important investments you will make in life. You may be paying off this car for the next four, five, or six years.

Let the salespeople know upfront that you won’t be taken for a ride. Do everything you can do to negotiate the car loan and knock the purchase price down. Start with a ridiculous number and work backward. If the salesperson gives you an offer that includes a monthly payment of a certain amount based on a 60-month loan, tell them you want the same payment with a 48-month loan.

Enter the dealership with confidence, stick to your guns, and don’t feel bad about walking away from any offers. It might also be helpful to practice your negotiation strategies and tactics to prepare.

7. Look at Both New and Used Cars

Buying a gently used car is regarded by many as the best way to save money when purchasing a vehicle. The logic is that new cars depreciate considerably the moment you take them home from the dealership.

In reality, buying a used car isn’t always the smartest choice from a financial standpoint. Used car pricing is sensitive to supply and demand, which can vary regionally, and macroeconomic conditions (used car prices tend to increase when the economy is weak).

Bottom line: Don’t write off a new car entirely, especially if you plan to hold onto your vehicle for the long term. Most depreciation occurs during the first five years of ownership, after which the net cost of ownership (of which depreciation is a major factor) declines significantly. The gap between the final lifetime cost of a gently used car retailing for $20,000 and a similar new car retailing for $25,000 isn’t as wide as you’d think.

8. Buy Based on Purchase Price, Not on Monthly Payments

Car dealers are notorious for offering an enticing monthly payment to potential buyers. Do not be misled. If this payment is attached to a 72-month loan, then it’s really not that attractive at all.

Always negotiate based on the purchase price of the car, and not the monthly payment. Also make sure you know the “full” purchase price of any car you buy. There could be many extra, hidden costs factored into the price, including various taxes, car preparation and delivery fees, and dealership costs you won’t know about unless you ask.

9. Don’t Mention Your Trade-In or Special Discounts, If Any

Play your cards close to your chest in all aspects of the car-buying process, especially when you have a trade-in. Don’t mention your trade-in until the end of the buying process. The dealer will likely use this information against you.

For example, say you’re looking at a $22,000 car, and the dealer’s rock-bottom price for that car is $18,000 (although he won’t share this information with you). If you have a trade-in worth $2,000, the dealer might offer to give you the car for $20,000 plus the additional $2,000 for the trade-in, for a total purchase price of $18,000.

If you hadn’t mentioned your trade-in, you could have negotiated the price down to $18,000 and then told the dealer about the trade-in, resulting in a final purchase price of $16,000. Negotiate these two aspects of the car-buying process separately. First, negotiate the best possible deal you can get for the car you want to buy, then go to work on getting the most for your trade-in.

Likewise, don’t mention any special discounts you bring to the dealership, such as from working in the auto industry or accumulating rewards as a GM BuyPower credit card holder.

10. Factor in Insurance Costs

Factor costs for car insurance premiums into the purchase price of your car. The cost of insuring a car is a significant factor in the vehicle’s overall cost. Get insurance premium quotes online from Allstate or Liberty Mutual. You’ll provide information about the car’s make and model and personal information including your age, marital status, and driving record.

Sports cars have higher premiums than conventional cars, but some cars have higher insurance rates for other reasons. For example, the Honda Accord, Honda Civic, and Toyota Camry are favorites among car thieves because of their higher resale values. As a result, the insurance premiums for these cars can be more expensive.

11. Avoid Impulse Buying

Prevent impulse buying by conducting extensive research before you buy a vehicle. Buying a car on a whim is a risky endeavor. You might realize after it’s too late that you can’t afford the car, or you may find its performance doesn’t meet your expectations.

By researching the make, model, and style of the car and reviewing insurance rates and financing, you should be able to put yourself in a car you’ll enjoy for many years to come.

12. Don’t Purchase the Add-ons

Buying a new car is a major purchase, and you might be paying it off over the next several years. If you finance the car, the overall costs for accessories will skyrocket, so keep the add-ons to a minimum. You don’t really need heated seats, and you can buy a portable GPS navigation unit online for much less than expensive built-in systems.

Rust-proofing is another add-on you don’t need despite what the salesperson might tell you. VIN etching, a rear camera, and a dealership maintenance plan are more add-ons you don’t really need.

13. Don’t Buy the Extended Warranty

The extended car warranties dealerships offer are expensive. Even worse, the coverage is often very limited and doesn’t cover the costs of many types of mechanical failure in new or used cars.

If you’re buying a new car, it should come with a manufacturer’s warranty that provides ample coverage for your vehicle. If you’re looking at a used car, keep in mind that many still have valid manufacturer’s warranties.

You especially want to avoid the extended warranty if you’ll be financing it as part of your car loan. The total cost of the warranty, including interest, will be exorbitant. Your best option is to simply deposit that money in a savings account for potential vehicle repairs and maintenance.

14. Always Test Drive the Car

Ninety percent of people who buy a new car test drive it first. Do not be among the 10% who don’t. You want to test drive the car for many reasons, but comfort should be foremost in your mind. There are some cars you just won’t feel comfortable driving. If this is the case, move on.

If you have children, bring them along on the test drive. Their comfort level is important too — and trust me, they will give you their honest assessment of the car. In addition to comfort, look for the following:

Idle. The car should be smooth and quiet.

View. Ensure the view from each of the mirrors is acceptable and you have a straight-line view of all dashboard gauges.

Controls. Flip on the air, locate the turn signals, and turn on the windshield wipers. Ensure that everything is easy to use. Some people find their fingers are too big to handle certain switches, buttons, or levers in some cars.

Handling and Brakes. Make sure the car responds when you push the accelerator or brakes. Cars vary significantly in sensitivity, and you want to choose a car that best fits your preferences.

15. Visit the Mechanic When Buying Used

If you’re planning to buy a used vehicle, it’s essential to have the car thoroughly checked out by a mechanic before finalizing the purchase. They’ll inspect the car and look for unusual signs of wear and tear, as well as potentially concerning issues.

Any mechanical problems or maintenance issues the mechanic finds may determine whether or not you buy the car. 5he mechanic’s report may also provide you with leverage to negotiate a lower purchase price.

Final Word

In the end, buying a car is a major purchase, and it’s important to research each and every aspect of the process. Educate yourself so you can go into negotiations well-prepared to get the best deal possible on a new or used car. By following the tips outlined in this article, you’ll get the best price possible on your next car.

NPR https://www.npr.org/2019/10/31/774757867/5-tips-for-buying-a-car-the-smart-way

https://piximus.net/media2/46053/cartoon-perfectly-sums-up-what-buying-a-car-is-like-1.jpg

New cars these days have better safety features and more tech gizmos than models from a decade ago. And let's face it: Trading in a beat-up clunker with grimy seats is an enticing idea.

But many Americans make big mistakes buying cars. Take new car purchases with a trade-in. A third of buyers roll over an average of $5,000 in debt from their last car into their new loan. They're paying for a car they don't drive anymore. Ouch! That is not a winning personal finance strategy.

But don't worry — NPR's Life Kit is here to help. Here's how to buy a car without getting over your head in debt or paying more than you have to.


1. Get preapproved for a loan before you set foot in a dealer's lot.

"The single best advice I can give to people is to get preapproved for a car loan from your bank, a credit union or an online lender," says Philip Reed. He's the autos editor at the personal finance site NerdWallet. He also worked undercover at an auto dealership to learn the secrets of the business when he worked for the car-buying site Edmunds.com. So Reed is going to pull back the curtain on the car-buying game.

For one thing, he says, getting a loan from a lender outside the car dealership prompts buyers to think about a crucial question. "How much car can I afford? You want to do that before a salesperson has you falling in love with the limited model with the sunroof and leather seats. "

Reed says getting preapproved also reveals any problems with your credit. So before you start car shopping, you might want to build up your credit score or get erroneous information off your credit report.

And shop around for the best rate. "People are being charged more for interest rates than they should be based upon their creditworthiness," says John Van Alst, a lawyer with the National Consumer Law Center.

Van Alst says many people don't realize it, but the dealership is allowed to jack up the rate it offers you above what you actually qualify for. So with your credit score, "you might qualify for an interest rate of 6%," says Van Alst. But, he says, the dealership might not tell you that and offer you a 9% rate. If you take that bad deal, you could pay thousands of dollars more in interest. Van Alst says the dealership and its finance company, "they'll split that extra money."

So Reed says having that preapproval can be a valuable card to have in your hand in the car-buying game. It can help you negotiate a better rate. "The preapproval will act as a bargaining chip," he says. "If you're preapproved at 4.5%, the dealer says, 'Hey, you know, I can get you 3.5. Would you be interested?' And it's a good idea to take it, but make sure all of the terms, meaning the down payment and the length of the loan, remain the same."

One word of caution about lenders: Van Alst says there are plenty of shady lending outfits operating online. Reed says it's a good idea to go with a mainstream bank, credit union or other lender whose name you recognize.


2. Keep it simple at the dealership.

If you're buying a car at a dealership, focus on one thing at a time. And don't tell the salespeople too much. Remember — this is a kind of game. And if you're playing cards, you don't hold them up and say, "Hey, everybody, look — I have a pair of queens," right?

So at the dealership, Reed and Van Alst both say, the first step is to start with the price of the vehicle you are buying. The salesperson at the dealership will often want to know if you're planning to trade in another car and whether you're also looking to get a loan through the dealership. Reed says don't answer those questions! That makes the game too complicated, and you're playing against pros. If you negotiate a really good purchase price on the car, they might jack up the interest rate to make extra money on you that way or lowball you on your trade-in. They can juggle all those factors in their head at once. You don't want to. Keep it simple. One thing at a time.

Once you settle on a price, then you can talk about a trade-in if you have one. But Reed and Van Alst say to do your homework there too. A little research online can tell you what your trade is worth in ballpark terms. Reed suggests looking at the free pricing guides at Edmunds.com, Kelley Blue Book and NADA. On Autotrader, you can also see what people in your area are asking for your car model. And he says, "You can get an actual offer from Carvana.com and also by taking the car to a CarMax, where they will write you a check on the spot."

So he and Van Alst say don't be afraid to walk away or buy the car at a good price without the trade-in if you feel the dealership is lowballing you on your old car. You have plenty of other good options these days.


3. Don't buy any add-ons at the dealership.

If you've bought a car, you know how this works. You've been at the dealership for hours, you're tired, you've settled on a price, you've haggled over the trade-in — then you get handed off to the finance manager.

"You're led to this back office. They'll often refer to it as the box," says Van Alst. This is where the dealership will try to sell you extended warranties, tire protection plans, paint protection plans, something called gap insurance. Dealerships make a lot of money on this stuff. And Van Alst says it's often very overpriced and most people have no idea how to figure out a fair price.

"Is this add-on, you know, being marked up 300%? You don't really know any of that," Van Alst says. So he and Reed say a good strategy, especially with a new car, is to just say no — to everything. He says especially with longer-term loans, there's more wiggle room for dealers to try to sell you the extras. The finance person might try to tell you, "It's only a little more money per month." But that money adds up.

"Concerning the extended factory warranty, you can always buy it later," says Reed. "So if you're buying a new car, you can buy it in three years from now, just before it goes out of warranty." At that point, if you want the extended warranty, he says, you should call several dealerships and ask for the best price each can offer. That way, he says, you're not rolling the cost into your car loan and paying interest on a service you wouldn't even use for three years because you're still covered by the new car's warranty.

Gap insurance promises to cover any gap between the purchase price of replacing your almost-new car with a brand-new car if your regular insurance doesn't pay for full replacement if your car gets totaled. Van Alst says gap insurance is often overpriced and is fundamentally problematic. If you still want the product, it's best to obtain it through your regular insurance company, not the dealer.


4. Beware longer-term six- or seven-year car loans.

A third of new car loans are now longer than six years. And that's "a really dangerous trend," says Reed. We have a whole story about why that's the case. But in short, a seven-year loan will mean lower monthly payments than a five-year loan. But it will also mean paying a lot more money in interest.

Reed says seven-year loans often have higher interest rates than five-year loans. And like most loans, the interest is front-loaded — you're paying more interest compared with principal in the first years. "Most people don't even realize this, and they don't know why it's dangerous," says Reed.

Reed says that if you want to sell your car — you decide you can't afford it, or maybe you have another kid and need a minivan instead — with a seven-year loan you are much more likely to be stuck still owing more than the car is worth. So he says, "It puts you in a very vulnerable financial situation."

A better way to go, Reed says, is a five-year loan for a new car and "with a used car you should really finance it for only three years, which is 36 months." One reason that makes sense, he says, is that if your used car breaks down and isn't worth fixing — say the transmission totally goes — you're more likely to have paid off the loan by that time.

Reed says a five-year loan make sense for new cars because "that's been the traditional way — it's kind of a sweet spot. The payments aren't too high. You know the car will still be in good condition. There will still be value in the car at the end of the five years."

Also, Van Alst and Reed say to make sure dealers don't slip in extras or change the loan terms without you realizing it. Read carefully what you're signing.

Reed says a colleague at NerdWallet actually bought a minivan recently and "when she got home, she looked at the contract." She had asked for a five-year loan but said the dealership instead stuck her with a seven-year loan. "And they included a factory warranty which she didn't request and she didn't want." Reed says she was able to cancel the entire contract, remove the extended warranty and get a rebate on it.

"But the point of it is," he says, "I mean, here's somebody who is very financially savvy, and yet they were able to do this to her. And it's not an uncommon scenario for people to think that they've got a good deal, but then when they go home and look at the contract, they find out what's been done to them."


5. Don't buy too much car. And consider a used car to save a lot of money!

"The golden rule is that all of your car expenses should really be no more than 20% of your take-home pay," says Reed. And he says that that's total car expenses, including insurance, gas and repairs. "So the car payment itself should be between 10 and 15%."

And if a new car with a five-year loan doesn't fit into your budget, you might decide you don't really need a brand-new car.

"We're actually living in a golden age of used cars," says Reed. "I mean, the reliability of used cars is remarkable these days." Reed says there is an endless river of cars coming off three-year leases that are in very good shape. And even cars that are older than that, he says, are definitely worth considering. "You know, people are buying good used cars at a hundred-thousand miles and driving them for another hundred-thousand miles," says Reed. "So I'm a big fan of buying a used car as a way to save money."

He acknowledges that which car you buy matters and that it's a good idea to read reviews and ratings about which brands and models are more or less likely to run into costly repair problems down the road. He says some European cars are famously expensive to maintain.

NPR has a personal finance Facebook group called Your Money and Your Life. And we asked group members about car buying. Many said they were shocked by how much money some other people in the group said they were spending on cars. Patricia and Dean Raeker from Minneapolis wrote, "40 years of owning vehicles and our total transportation purchases don't even add up to the cost of one of the financed ones these folks are talking about."

Dean is a freelance AV technician, and Patricia is a flight attendant. They say, "our nicest, newest purchase was a 2004 Honda Accord for $2400, bought last year, that with regular maintenance could likely last another 100,000+ miles." And they say they "can't understand those who insist on driving their retirement funds away."

Even if you buy a slightly newer used car than the Raekers', the couple raises a great point. What else could you be spending that car payment money on? And if you can cut in half what you might otherwise spend, that's a lot of extra money for your retirement account, your kids' college fund or whatever else you'd rather be doing with that money.

My daughter has gone the leasing route and it's working in her life NOW. She had car ownership for MOST of her life and now leasing works for her.