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The COVID-19 pandemic has forever changed so many parts of our lives – including the car-buying process and experience.

This content is sponsored by PenFed Credit Union, federally insured by NCUA.

The COVID-19 pandemic has forever changed so many parts of our lives – including the car-buying process and experience.

However, the principles of car buying remain the same – even if the circumstances and habits are changing. The experts at PenFed Credit Union are able to help make it as easy as possible with their advice and guidelines for navigating car buying.

Leading up to the pandemic, a shift toward online buying was already underway, but when the pandemic hit, dealerships were forced to expand their online offerings and home-delivery services.

“Dealers are reaching new consumers while developing a different set of customer-relations skills since many of the transactions are now being completed in a customer’s driveway rather than showroom,” Stellantis (formerly Fiat Chrysler Automobiles) U.S. Head of Sales Jeff Kommor said to US News & World Report.

Now consumers can go online to research cars, find financing and connect with a local dealership. Online shopping and car purchasing also removes the time pressure common with many in-person transactions, US News & World Report noted. When shopping online, the buyer has time to compare competing offers and research the best financing deals.

“As I’ve said since the beginning of the pandemic, customers like the digital experience much better than the dealer experience,” Carla Bailo, president of the Center for Automotive Research (CAR), said to US News & World Report. “Today, many customers do the bulk of their research online before ever entering the dealership doors.”

The experts at PenFed Credit Union recommend starting your car search by setting a budget and getting pre-qualified for a loan. When you pre-qualify with PenFed Credit Union, you can see up to 4 different payment options without impacting your credit score which allows you to more easily find a monthly payment they are comfortable with.  From there, they suggest saving for a down payment by setting aside between 10% to 20% of the vehicle cost for a down payment.

“Putting down as much money as possible will reduce your monthly payments and help you get a lower interest rate on a loan,” PenFed’s experts said. If you have a trade-in vehicle, you can find its value easily online at Kelly Blue Book or Black Book. You may be pleasantly surprised by how much your old car is worth.

Car buying has faced a major transitional period during the pandemic. Customer demand for new cars rebounded after the uncertainty of 2020 and automakers have found themselves unable to meet the demand – in large part because of a semiconductor chip shortage and supple chain problems.

That chip shortage has led a slowdown in new vehicle production and thus a very high demand in used cars. The demand for used vehicles has been felt in the D.C.-area too, where used vehicle prices in the D.C. metro have risen more than many cities.

The lower stock of vehicles all around means fewer drivers are negotiating for the price they’d like because they’re just happy to have snagged a vehicle, Bankrate notes. Still, buyers shouldn’t throw away the notion of negotiation – they can often negotiate dealer extras such as pain protection, rust proofing and VIN etching to push down the out-the-door price, Bankrate added.

The experts at PenFed Credit Union recommend to always dig into the numbers before engaging in negotiations. That means checking the value on Kelley Blue Book, Edmunds, TrueCar or dealer websites. It’s also important to understand what’s negotiable – including things like interest rates, extended warranties, upgrades and add-ons and trade-in values. Lastly, lock-in your rate and find the best monthly payment option without impacting your credit score by pre-qualifying with lenders. With rising interest rates, pre-qualifying can allow you to save your pre-qualified loan APR for up to 30 days.

No matter the method for buying a car, some tenants always hold true.

First, know the best price for the vehicle you’re looking for, PenFed says. The number advertised in commercials or on the car’s windshield isn’t always the true cost. Instead, buyers should pay attention to the car’s MSRP – what the automaker recommends dealers ask for the vehicle, fair market value – the “going rate” for a particular vehicle in your area and invoice price – the amount the automaker charges the dealer for a vehicle.

“Invoice price is the smallest of the numbers and, arguably, the most important. The closer you can get your vehicle purchase amount to it, the better,” the experts at PenFed Credit Union said.

Buyers should get pre-approved for a loan, which will give an estimate of how much they can borrow, loan terms, and the interest rate.

Those looking for a car will need to know their auto loan financing options, too. There are several components that affect both monthly payments and the total amount buyers have to repay. They include loan amounts – which can be significantly less than the value of the car, annual percentage rate – the effective interest rate you pay on the loan, and loan term – the length of time you have to pay the loan.

When trying to reduce the size of monthly payments, longer terms may have higher interest rates but they can reduce your monthly payment obligation. Consider how important the lower payment is to you monthly budget when selecting your loan options.

PenFed’s experts said. “To lower your monthly payments, most consumers will be in a very good position if they are trading in a vehicle – used vehicle trade-in values are at all time highs right now due to inventory shortages. You can use an auto loan calculator to estimate the impact longer terms and monthly rate on your loan or look for options to pre-qualify without impacting your credit score to see your specific options.”

Next, car shoppers should talk with several dealers to get their best out-the-door price on the vehicle you want – that way they can compare quotes.

The final step is to close the deal.

“Once you’ve settled on a price and payment plan and selected any additional accessories and services you may want, all that’s left is to negotiate the price, review the contract and sign the paperwork. Then you can take the keys to your new ride,” PenFed’s experts said.

Buying a new car is a big financial decision, and a process that has evolved during the pandemic. But PenFed notes that with proper preparation, buyers can have confidence in their purchase and payment plan.

“If you plan ahead and avoid getting too swept up in the moment, you can drive home the car or truck of your dreams while living within your means,” PenFed noted.

Read more on PenFed Credit Union’s website about everything you need to know about purchasing a car. PenFed Credit Union is federally insured by NCUA.

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