What you need to know when considering buying a car.

If you are considering buying a new or used car from a dealership, I think I can share a few things that can make your experience a little better. I was a car salesman for two and a half years at the busiest dealership in North Mississippi for the brands we sold. I enjoyed selling cars and enjoyed the people I worked with as well as the owner and managers of the dealership very much. I feel like I was successful at car sales. I will let you in on a few things you need to know about buying a car. This only applies to a dealership and not individual purchases. I will also add that the car business as most businesses change frequently, and it has been a few years since I was in the business but the information, I am sharing still holds true.

1. Prepare before heading to the dealership. Do your research to decide the vehicle that is right for you. Are you looking for something practical or buying your dream ride. Ask yourself, what is the three most important things I am looking for in a car. The answers will help narrow down your search because if you are looking for something with good gas mileage you probably don’t want to be looking at a Tahoe, Suburban, or Truck. If you need something to tow a load you are probably not going to be looking for a car. If you have children, you probably should not be looking at a two-door car. Just as a couple of examples.

2. Figure out your budget. Are you paying cash for your car or are you going to finance. If you are going to finance how much are you planning to pay down and how much can you afford payments to be a month. Are you going to have a vehicle to trade in and if you still owe on that vehicle how much do you owe and how much are you expecting to get trade in value. Kelly Blue Book is a great resource for determining trade in value of a vehicle. Look up your car and then deduct the amount you owe and that will tell you how much of your cars value will go toward the cost of your new car. Dealerships are usually very close to trade in values on KBB.

3. Assuming you will be financing know your credit and credit score. If you have never bought anything on credit your score is probably low. If you have never purchased anything on credit with a higher value, you may not qualify for a $30K+ loan because of your lack of credit history. Know your income to expense ratio. Which means that a lender can only loan you a percentage of your income because you have enough left over to cover your cost to live.

4. In order to figure out how much of a car you can buy you can expect to pay about $20 per month per $1000 financed. So, if you are financing $20000 you could expect your payments to be around $340 per month depending on your interest rate and term of the loan. You can also take the MSRP (price on the window) of the car you are looking at and divide that amount by 60, assuming you want to finance for five years. That will tell you about what your payment would be before interest. 0% APR is not even in the realm of possibility anymore so you will have an interest rate even if you have perfect credit. I have had people pick out a $50K car with no money down and then tell me they do not want payments over $300 a month. Really, me too.

5. Set real expectations. If your budget for a car is $10000 realistically you are looking at a car that is probably going to have over 100K miles and is not going to be in excellent shape. You also need to understand that depending on you credit they may not be able to find a lender that will finance a car with over 100K miles. Also understand that dealerships sell cars to make money. They are running a business and will not operate at a loss just to sell you a car. The mark up on some new cars can be less than $100. More expensive cars have a higher mark up but even with that do not expect to walk up to a vehicle with a window sticker price of $50K and offer $30K and not get laughed at. You think I am joking; I have had it happen multiple times.

6. Expect to have your credit checked. Most experienced car salesmen will not talk seriously to you about a car without knowing you could buy. As a salesman there is nothing better than spending an hour or two walking around the parking lot helping a customer pick out the perfect car only to find out that customer cannot even buy a pack of gum. Not judging but many people have no idea if they even have credit or not. I have sold cars to people that looked like they did not have a penny to their name only to find out they could buy three of the most expensive cars on the lot with only their signature. I have also had people that had very good jobs with six figure incomes that could not afford to pay attention.

7. Cash is king. Even if you have bad credit if you walk into a dealership with $10K in your hand you may not be able to get financed but they are certainly going to try and get you approved. I have literally seen people buy credit with a large down payment. Reason is because it reduces the lenders risk.

8. Now that you know you can buy and know what you can afford, I know you are looking for the perfect car, with every feature you want, in your favorite color. I am sorry to tell you this, but they have not made that car. It is not on the car lot where you are looking and is probably not on a car lot anywhere in the United States. My point is remembering the three most important features you are looking for in a car and pick out a car on the lot that meets your needs. When you pick out a car and then say that is the one but add a sunroof, change the engine from a V6 to a V8, paint it passion pink, add an 8-track player, and have it ready to go in an hour and I will take it. Ahhh no. Well, the dealership can order it for you. Yes, they can but that will be a special order, it will come with a special-order price tag, and the last special order I sold the guy finally got his car a year and a half later and I had changed careers. Pick out a car on the lot with most of the features you want. That is realistic and you will get to take it home that day.

9. You will need a drivers license and insurance to buy a car. They will check. If you do not currently have insurance, plan ahead of time to get insurance. You will need proof before driving the car away. Usually if you already have insurance, it will transfer over, no problem.

10.Drive the car before you buy it. Play the radio, run the AC, roll the windows down, look under the hood and in the trunk. Climb in the trunk to see if there is enough room for a body just in case. But check out the car enough to know it meets your needs and expectations. In most states once you sign the papers and drive away you own it. There is not a return policy so be sure.

Did you get a good deal? A question that I got asked many times after selling a car. If you got a car that you like, in your price range, with payments you can afford, and you have a smile on your face driving it home then you got a good deal. The other question I got asked was how much I made commission for selling the car. I earned a commission or percent of what the car sold for over how much the dealership paid less the dealer fee. The salesman’s commission did not include dealer fees. There was however a $100 minimum for selling a car. I sold a lot of cars that I only got paid a $100 commission. I sold new cars for MSRP and only earned $100. Like I said before some cars do not have much of a mark up and in some cases not even enough of a mark up to cover the dealer fee. I did sell other cars that I made decent money on but there were a lot of factors that helped. If you will educate yourself, set realistic expectations, and understand the process your car buying experience will be pleasant.