Begin, with the end in mind when car shopping...

Imagine you are house hunting and you walk through a perfect house with all the bedrooms you could even want and every amenity you could desire. At the end of the tour the realtor asks you what you think about the $4 million dollar asking price and you reply; “if you could get the payments under $1500 per month we are ready to move right in…”
Ridiculous, yes however that same scenario plays out every day on dealership lots across the country.  One of the biggest causes of difficult negotiations and bad feeling about the car buying experience stems from the real lack of homework being done regarding monthly payments. There is no shortage of websites these days that will give out all kinds of advice on how to get the ‘best price’ when car shopping, some will even show you pricing right on their site however, most of them fail to mention that there is a connection between that great price and the monthly payment it takes to pay back the loan for that amount. When folks ask me what the best advice I have about car shopping is I always answer the same way, “know you own monthly budget and what the buys, then stay within that amount when you go out shopping.” Sounds simple right? Unfortunately it doesn’t seem to work that way a lot of the time! Many times car shopping is done on impulse or, sometimes folks do their homework and know how much car they SHOULD be looking at and then get caught up in the excitement of new cars and try to buy more car than they can afford in the hopes that somehow the dealer will be able to ‘make it work’.  The surest way to a long drawn out negotiation is to try to buy a vehicle that has a cost of more than the budget you have for yourself and think that ‘if the dealer REALLY wants to sell the car they will be able to make the math work’. I see it day in and day out, a customer will come in and pick out a car and sit down to work out the deal armed with all kinds of quotes from websites and other dealers. I agree to a price and then show the customer payment options and that’s when they freak! All the effort and time invested in getting a killer deal just to realize that the payments on that sweet price wont work….
To keep things basic I am just talking about a purchase here and yes, with enough down payment any monthly payment can be reached but for arguments sake let’s assume a no money down purchase just for a moment. Let’s say you like the new Fusion and pick one out that has an MSRP of $25995. It really doesn’t matter how much research you have done and how willing the dealer is to sell the car there is little hope of achieving a monthly payment of $350 per month without a whole lot of help! What often happens in a case like this is the customer gets frustrated and leaves, then pulls into another dealer ship with a better understanding of where his payment objective needs to be in order to get the car he wants and enters negotiations with a new target or, looks for a car that better fits his budget. Either way there is often a negative feeling about the first dealership and the car buying process in general.
There are many online calculators that will show auto financing payments and even without an exact idea of the rate you may qualify for its easy to get a general idea of a target payment will payback. For instance, to reach a target of $450 per month at 60 months the loan would payback somewhere between $18-27,000. Now keep in mind that might need to include tax, registration and any other fees that may be charged in your area. If you are looking for a car with a price in that range all should be good and negotiation may get you the deal you want however, if you had your sights on an SUV with an MSRP of say, $45,000 there is simply no amount of wheeling and dealing that will have you on the road and with a payment in that budget!

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