Bring a Calculator When Buying a Car (Car Buying Tips)

Bring a Calculator When Buying a Car

When I sold cars, I was amazed at the number of people who did not bring a calculator with them. They were at the mercy of the dealership to give them all of the numbers and they had no way of checking to make sure everything was in the right ballpark.

Never Discuss Your Desired Monthly Payment

Car dealers will get you to focus on your monthly payment and most customers take the bait. Eventually, they lose sight of the total price as they battle out the payment they want. In many cases, I've seen customers pay more than sticker price for their car without realizing it.

Most people want a car that fits in their monthly budget, but it's a big mistake to discuss monthly payment with the dealer. As tempting as it is to ask the salesman, "What would the payment be on this vehicle?" you can't allow yourself to do that.

If you're truly worried about your monthly payment, then you need to concentrate on the total selling price of the car you're buying. Buying at the lowest total price will automatically get you the lowest possible monthly payment. Simply tell your salesman that you are not concerned about the monthly payment and never tell him what your targeted monthly payment is.

You Need to Quietly Figure Out the Monthly Payment Yourself

Ideally, you should use a car loan calculator to determine the monthly payment for the car you want to buy even before you visit the dealership. It's easy to figure out the monthly payment for any car without asking the salesman. Do you have your calculator? You will need one with the exponent key. It should have the symbol ^ or it might look like y with a small x to the right and above it. Here is a trick that you won't find anywhere else. I'm a mathematician, so I developed a printable table to take to the car dealership that will get you the correct monthly payment to the penny for any car you could possibly find. This table is in my e-book The Car Buying Bible (www.carbuyingbible.com). Since we don't have the table here, I developed a shortcut method that will be in the ball park of the correct payment.

How to Estimate Your Monthly Payment

For a 60-month payment (which is standard for most folks), do this. Know the interest rate that you expect to pay. If the rate is 5.3%, you will need to use .053. Suppose that you will be financing $40,000. This is used in the example below.

Do this in your calculator to get your monthly payment:

0.14361679 ^ .053 * 0.016790427 * 40000
or $759.36.

The exact payment would be $760.36, so this is off exactly by $1.

In general, the method is to use
10.14361679 ^ (interest rate) * 0.016790427 * (amount financed)

The accuracy can vary depending on interest rate and the amount that you will finance. In general, this will put you right in the ballpark. The larger numerical errors occur for extremely high or low interest rates, so this works amazingly well for the range of interest rates that most people would expect to pay. This method gains accuracy as the price of the vehicle decreases. Even if you don't chose to try this yourself, a calculator still can help you check the dealer's numbers for reasonability.

Visit The Car Buying Bible (www.carbuyingbible.com) for more great car buying tips and a powerful car loan calculator.