8 Things to Know Before Buying a Car

8 Things to Know Before Buying a Car

A nice couple sat in front of me, ready to say goodbye to their not-so-nice SUV and get into a bigger one with more bells and whistles.

Well, they thought they were ready . . .

As it turns out, they had almost $10,000 in negative equity, wanted payments less than $500 a month, and needed something larger than our most affordable SUV, the Chevy Equinox. They planned on putting zero money down.

When I gave them a brief overview of how auto financing works, they were quick to understand why they were asking for the impossible. Had they known what I’m about to teach you, they could have saved themselves some disappointment, not to mention a trip to our dealership.

In a nutshell, here are some things to keep in mind before speaking to a car salesman:

1. Know Your Credit

I’m not talking about visiting one of the free online sites. Their information is outdated and, speaking from experience, the score they give you is typically 50 to 100 points off.

I’ve seen the looks on people’s faces when they see a credit score of 625, when they were certain it was a 710. Don’t let that be you. Fork out the 12 bucks and find out your real credit score. Trust me, it’s much better to know it before you go to the dealership.

2. Research the Vehicle You Want, but Be Flexible

You know how you can go on almost all the manufacturers’ websites and build your own vehicle, beginning with trims, options, packages, colors, engine size, etc.? Yea, well, don’t do that. Why?

Because buying a car is not like ordering a pizza. The vehicles are pre-built at the factory, then shipped to various dealerships.

Another reason is that there’s much more to buying a car than just the facts. I have seen customers who came to the dealership for the sole purpose of purchasing Vehicle A but, after discovering Vehicle B, decided this was the one for them.

Some things you just can’t get a sense for by reading or looking at pictures and videos. Do your research online and know the vehicle you’re planning to purchase, but be prepared for the unexpected. There just might be something more to your liking at the dealership that you haven’t considered.

3. Determine How Much Vehicle You Can Afford

OK, this is a biggie. Nothing sucks worse than to have your eye on the $45,000 fully loaded sedan, then getting the news that you can only afford a $16,000 pre-owned subcompact, and that’s if you put $5,000 down.

How can you make sure this doesn’t happen to you? Easy. Just follow the $20 per $1000 rule.

What am I talking about?

Here is the $20 per $1000 rule in a nutshell:

For every $1000 that the vehicle costs, your monthly payment will be $20.


  • For a $10,000 vehicle you would expect to pay $200 per month
  • For a $20,000 vehicle you would expect to pay $400 per month
  • For a $25,000 vehicle you would expect to pay $500 per month

These figures are far from exact, but they give you a general idea about how much vehicle you can afford to purchase. For example, if your current car payments are $450 per month and you want to purchase another vehicle while keeping your payments the same, you’re probably looking at a vehicle around $22,000.

4. Negative Equity

I’ve heard it said that the only people who don’t have negative equity in their vehicles are those who have their vehicles paid for. I have seen exceptions to this, but it’s true that most people who have a car payment owe more on their vehicle than the vehicle is worth.

For example, let’s say you owe $16,000 on your vehicle. You bring it to the dealership to have it appraised, and it appraises for only $9,000. That means you have $7000 in negative equity.

There are different ways to combat negative equity. One way would be to make a sizeable down payment. Another would be to purchase a new vehicle with a significant rebate or incentives.

These rebates or incentives go a long way toward eating up your negative equity. It is for this reason that if you go to a dealership with negative equity, they will almost always steer you toward their new vehicles rather than their pre-owned selection.

5. No More Haggling

If your last time in a car dealership was 10 years ago, get ready for a shock when you walk into a dealership these days.

Gone are the days when the dealerships mark up their vehicles significantly. Why? The Internet.

Dealerships these days cannot compete without websites. Their website also has to have accurate pricing information. You know what happens when Dealer A marks his Chevy Suburbans up higher than Dealer B? He loses business.

To stay competitive, both Dealer A and Dealer B have to show their prices on their website as being relevant to the current market. This is as transparent as it can get. There simply is no room for the mark-ups that dealerships put on their vehicles in days past.

Why is this important to know? Because when you see the dealership’s “Internet Price,” understand that this is the current market price of that vehicle. There is no wiggle room. This is not your car salesman trying to scam you – this is the new nature of the business.

Just as you wouldn’t go into Best Buy and say, “I’ll give you $600 for that TV that retails for $750,” you wouldn’t go to a car dealership and get them to reduce their internet price. That price is already bare bones.

6. Bring Your Documentation

You really only need 3 or 4 documents – Driver’s license, current insurance card, registration (if trading), and your trade-in’s title (if paid for).

You’ll be amazed at the time you can save at the dealership if you have these together, ready to hand to the salesperson when he/she asks for them. I cannot count the times when my car deal was delayed more than an hour because a customer couldn’t find a current insurance card.

This is true even if you’re going to the dealership to “just look around.” I find that most people who buy vehicles today do so after visiting the dealership to “just look around.”

This happens more frequently with customers who are interested in buying pre-owned. They understand the 2013 Acadia Denali with 8,000 miles on it probably won’t be on our lot one week from now, and if they go home to “think about it,” it will probably be gone when they come back.

Believe it or not, this happens all the time. Just last week, a young lady and her father test drove one of our pre-owned Jeep Renegades. She loved it, but wanted to test drive a Nissan Juke at another dealership. Ninety minutes after she left our dealership, another salesperson sold the Renegade.

She returned to the dealership the next morning, check in hand, ready to drive her new Jeep home. She smiled, but I sensed her extreme disappointment when I told her another customer bought the Renegade.

7. Set Aside Some Time

Car deals take some time. Yes, you can expedite the process somewhat, but expect the process to take at least 3-4 hours.

You can help streamline the process by having all your documentation ready. Also, plan on about 30 minutes per test drive. So, test driving 4 different vehicles translates to 2 hours at the dealership.

Immediately after you agree to the numbers, your salesperson kicks into high gear. Up until this point, you controlled the pace by selecting your vehicle, test driving, and asking questions.

Now, however, your sales professional must complete vital paperwork. The quicker he/she completes this paperwork, the quicker you leave the dealership and begin enjoying your new purchase.

She will probably ask you for your documentation at this time, make copies, and have some preliminary paperwork for you to sign before she escorts you to the finance office. Now is not the time to make conversation, as delaying her completing the paperwork can mean you spend an extra hour or two at the dealership.

Even if your salesperson has done everything he can to expedite the process, you may still find yourself facing a lengthy wait to finalize the deal in the finance office, especially if the dealership is busy (as on most Saturday’s). This is nobody’s fault, but is the nature of the business.

Attention to detail drives finance professionals to pay close attention to every document set before them. Failure to do this might cost you and/or the dealership many thousands of dollars. The buck literally stops at the finance office.

The finance process typically takes 30 to 60 minutes per customer. If two customers are ahead of you, your wait can be as long as 2 hours. This is why your sales professional rushes to complete the preliminary paperwork. The quicker she completes it and gets it to finance, the less chance another customer’s deal will be in front of yours, meaning your wait time is less.

8. Choosing a Dealership

Does it really matter which dealership you visit? I mean, the 2018 Chevrolet Silverado 1500 Crew Cab All Star Edition on my lot is the exact same vehicle as the one sitting on a lot somewhere in Nashville, isn’t it?

And, when you visit the different dealerships’ websites, aren’t the prices on the same vehicle exactly the same also?

Other than location, why would you choose to buy a vehicle from me? Is it my dashing good looks and bubbly personality? Could be, but I doubt it.

What if you could have a warranty on your new or used vehicle that lasted as long as you owned that vehicle? And what if I was the only one in the state of Tennessee to offer this kind of warranty?

I bet you would at least give me a second look, good looks or not.

To learn more about my warranty, Click Here, or call me on my cell at 615-605-5701.