Piggy bank wearing glasses in a classroom

Steps for buying a new car: Part II

Girl holding up a key while leaning on a car

Like the research portion of the car-buying process, a banking service can be a great help once you are in the dealership and ready to buy. After picking out the right car for you and determining the cost, here are some steps to take to ensure you are getting the best possible deal:

1. Determine the method of payment
After a price has been agreed upon by both parties, it is time to figure out how to pay for the vehicle. Unless you can pay in cash for the total amount of the car, there are two payment choices: buying and leasing. The big difference between them is ownership. Buying the vehicle means the car is all yours once it is paid off. Leasing means you use the car for a specified amount of time, then bring it back to the dealer at the end of a contract.

Buying a car requires taking out a loan, and the cost is usually higher because the customer is paying off the entire purchase of the car, along with interest, taxes and fees. Lease payments are usually lower per month than buying, because you are not buying the entire vehicle but just for the length of the lease term, according to Consumer Reports [1].

2. Warranties and insurance
When buying a new car, customers can purchase specific warranties for the vehicle. Warranties are safety measures that can come in use if problems arise. Most purchases come with the a standard form or warranty, called bumper-to-bumper. That plan covers the repairs on items such as air conditioning, audio systems, fuel systems and major electrical components, Cars.com stated [2].

There are additional warranties that many customers choose to add on to the standard bumper-to-bumper coverage. These include packages that cover the vehicle for a certain number of miles, roadside assistance or extended length, which prolongs the packages past their normal end date. Many of those coverage options are called extended warranties. All of these warranties cost money, but could be beneficial down the road in the case of an emergency.

Along with the extra packages, purchasing insurance is also required in most states, so factor in these extra costs when budgeting for the cost of a car.

3. Out with the old, in with the new
You have done the hard part. A new car has been researched and selected, a price has been negotiated and agreed upon, a finance plan is in place and the warranties and insurance agreements are set. But before driving off the lot with your vehicle, there's one more thing to do: get rid of your old ride. If you are on a leasing plan, this is a simple trade-in. If you own the car, it can be more complex.

Many customers choose to sell their previous car to the dealership, using the money to help pay for the new vehicle they are buying. There are pros and cons to this strategy, according to the experts at Kelley Blue Book [3].

Trading into a dealership is quick and easy to do, but it may not bring you back the most money. For customers looking to maximize the investments they have made into their vehicle, it may be optimal to take the time and effort of selling it used on the open market. That too has its risks, so think over how you'll get rid of your old car before buying a new one.

[1]. Leasing vs. buying a car

[2]. Making Sense of New-Car Warranties

[3]. 10 Steps To Buying A New Car

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its affiliates and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.