- Do: Identify the Fair Market Value and Average Selling Price
Use a widely accepted source like Kelley Blue Book to find out the fair market value and average selling price of the car you’re considering. When car dealers know you’ve done your homework, they are more likely to offer their best deal first.
- Do: Consider Total Cost of Ownership
Buyers tend to be preoccupied with new car prices, and the cost of secondhand cars, for that matter. Every car costs more than the sticker price indicates. It’s up to you to explore every fee and cost associated with the vehicle you’re considering, including loan payment amounts, gas, insurance, and maintenance.
- Know Your Credit Score
There is a direct correlation between your credit score and the loan you’ll be able to secure. Your FICO credit score, which ranges between 300 and 850, is an approximate representation of the risk you pose to lenders.
“Before ever visiting a dealership, a car buyer needs to know what his or her credit rating is and how that will impact the financing options,” said Karl Brauer, former executive publisher at COX automotive. “The best way to do this is to get a report from one of the major credit-tracking companies.”
Equifax, Experian, and TransUnion can provide your credit report and score.
- Do: Raise Your Credit Score
Use the time you’re car shopping to boost your credit score. “A better credit score will mean better financing terms and lower interest,” said Brian Moody, executive editor at Autotrader.
“The ads people see on TV for low lease payments or low-interest rates all have fine print — that fine print says ‘for buyers who qualify.’ Translation: buyers with excellent credit,” said Moody. One of the fastest ways to quickly boost a score is to pay down credit card debt because credit-card utilization carries a lot of weight with credit reporting agencies.
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