New Car Contract: 3 Tips to Help Navigate
The months leading up to the New Year and immediately after are a peak selling period for car dealers. There’s the traffic from holiday sales. Then, come January, new models will roll onto lots. That means tons of sales and promotions and, as one recent survey points out, happy buyers.
Car buyer satisfaction is up, according to the recent 2012 U.S. Sales Satisfaction Index. In fact, among buyers, the most significant indicator of satisfaction was “working out the deal,” which included: price of the car, the price of a trade-in and the terms of the car loan. Of course satisfaction varied widely depending on the car dealer with luxury brands ranking high. But you don’t have to make a big buy to score a winning deal. Everything you need to know about your new car deal is in the agreement. To help you navigate it, here are three tips courtesy of the wise folks at Edmunds.com.
Set Terms Up Front
“Make sure that your terms are clear before drawing up a contract,” says Ron Montoya, consumer advice editor for Edmunds.com. He says, when discussing the deal, you want to be clear on the length of the agreement, monthly payments and credit you’ll have from a trade-in or downpayment. Montoya also suggests getting pre-approved for an auto loan with your local credit union or bank before ever stepping foot in a dealership. “It’ll give you a bottom line from which to negotiate and help keep the other expenses in check.”
Ask For the “Worksheet”
The contract to finance your new wheels will include several important parts. You’ll want to read it in its entirety, paying special attention to the boxes where fees and prices are itemized. Often the sticker price you’ve negotiated will start to disappear, as dealers tack on fees in these boxes. “In some cases, the difference could be only a few dollars, attributable to a small local fee such as tire disposal on your trade-in. But in other cases you might find a new, more substantial fee added to the contract,” says Montoya. Ask for the “worksheet,” a sort of invoice of costs, and review it carefully.
Look Beyond the Sticker Price
Montoya says the biggest mistake a car buyer can make is getting caught up on the sticker quote when so many other factors go into making a deal good or bad. If you’re buying a car with cash, your contract should only include four items: the purchase price, sales tax, motor vehicle registration fees and a documentation fee for preparing the contract. When financing a new car, pay close attention to the down payment/trade-in value, interest rate, amount financed and the length (or term) of the loan. Finally, the components that will make up your new car lease contract are: the cost of the car (or “capitalized cost”) drive-off payment, term of the lease and the allowed mileage, the miles allowed for the length of the lease. With these in place, and in comfortable range, you’ll add to the growing list of satisfied car buyers this year.
