What’s the Smartest Way to Buy a Car?

Woman driving a car.

Buying a car is a rite of passage, whether it’s your first high-mileage sedan or a growing family’s minivan.

Nearly every buyer will ask the age-old question of “is it better to buy a new or used car?” It’s important to do your research before you drive away no matter what you’re buying.

Once you’ve decided to purchase a car – whether new vs. used – there are other expenses to keep in mind. If you need a loan to purchase the car, you will pay interest on the amount you borrow. Additionally, you will be required to insure your car and the cost can vary widely depending on the type of car, location and coverage.

Depreciation is another factor to consider. Is it worth buying a new car? With some new cars dropping in value in the first year, it pays to do your homework before making the commitment.

First, decide what kind of vehicle you need. What you choose is entirely up to you, but a little red sports car is probably unwise if you drive clients around or ferry four kids to soccer games. Similarly, think hard before you pay extra for a four-wheel drive sports utility vehicle if it seldom snows where you live and your only off-road driving is in parking lots.

Why buy a used car? A late-model used vehicle may cost thousands of dollars less than a new version of the same make and model and still meets all your needs.

Auto leasing may be an option for you, with advantages such as a low down payment, convenience and lower monthly payments.

Car Buying Tips and Tricks

Do Your Research – You’ll need ammunition in your search for the best buy. Knowledge is power, so learn everything you can about the vehicles you’re considering. Check Consumer Reports for the lowdown on a model’s value (or lack of value) and for technical and performance data. Consumer Reports publishes a maintenance guide each spring that shows the repair history on cars. Talk to people who own the cars you’re considering so you’ll get a ground-level view of the good and bad points. For those shoppers who are scrolling their phones looking for their next vehicle, check websites such as cars.com, J.D. Power and Kelley Blue Book for ratings, reviews and up-to-date values.

Shop Around - Don't settle for the first car you come across. Take the time to visit different dealerships and explore various options. This will not only give you a better understanding of the market but also allow you to compare prices and negotiate better deals. Keep in mind that different dealerships may offer different incentives or discounts, so it's worth exploring all your options. Additionally, consider attending car shows or local auctions where you can find a wide range of vehicles at competitive prices. These events often attract both private sellers and dealerships, giving you a chance to find unique deals and potentially save some money.

Consider Your Needs - Before making a final decision, it's important to assess your needs and priorities. Think about the purpose of the vehicle, whether it's for daily commuting, family trips, or off-road adventures. Consider factors such as fuel efficiency, cargo space, safety features, and technology options that align with your lifestyle.

If you have a family, prioritize vehicles with ample seating and advanced safety features like blind-spot monitoring and automatic emergency braking. On the other hand, if you're a frequent traveler, prioritize fuel efficiency and comfortable seating for long journeys.

Test Drive - Never underestimate the importance of a test drive. It's the best way to get a feel for the vehicle and determine if it meets your expectations. Pay attention to the comfort of the seats, the responsiveness of the steering, and the overall driving experience. Take the car on different road conditions to see how it handles and listen for any unusual noises.

During the test drive, don't hesitate to ask the salesperson questions about the vehicle's features, maintenance history, and warranty. A reputable dealership will be transparent and provide you with all the necessary information.

Explore Financing Options - Once you've found the perfect car, it's time to consider your financing options. While some people prefer to pay in cash, most buyers rely on auto loans. Shop around for the best interest rates and loan terms. Consider getting pre-approved for a loan from your bank before visiting the dealership. This will give you a clear budget and bargaining power when negotiating the price. Remember to carefully read and understand the terms and conditions of the loan agreement before signing anything. If you're unsure about any aspect, don't hesitate to seek advice from your banker or someone knowledgeable in car financing.

Trade-In or Sell Yourself?

If you want convenience, trade in the car you own. Just a few clicks on popular online car retailers – think CarMax and Carvana – will give you an estimated trade-in value. A dealer or local used car reseller may be able to match it.

You may get more cash if you detail your car, keep accurate records of the car’s maintenance and decide to sell it yourself. The process may take longer, however, and won’t always offer the convenience of a trade-in.

The Deal, No-Haggle and Otherwise

There are one-price car dealers who won’t haggle over price because they have already put a realistic sticker on their vehicles. This is an attractive way to buy if you are not comfortable negotiating a price or if you find haggling with a salesperson not to your taste.

Keep in mind that dealers are often ready to, if pressed, give a little to get your business. By knowing the real value of the vehicle, you’re at a decided advantage. If you’ve done your research and found a cheaper online price or available rebate, bring proof of the deal with you.

Courtesy, firmness, and awareness of the car’s real value will go a long way in securing your best price.
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A shorter-term loan with larger payment amounts will save money in the long run.

Emily Dean, SouthState Director of Consumer Lending

How Do You Finance a Car?

Now that you’ve chosen your new or used car in person or online, choosing your financing is the next important step. “Be sure to get the shortest payback time you can comfortably handle. A shorter-term loan with larger payment amounts will save money in the long run,” advises Emily Dean, SouthState’s Director of Consumer Lending.

For example, the monthly payments for a $15,000 loan for five years at 5% are $283; $1,984 in interest costs. Alternatively, the monthly payments for a $15,000 loan for 4 years at 4% are $339; $1,257 in interest costs. By paying $56 more each month and paying off your loan one year sooner, you will reduce your total interest cost by $727.

Points to Remember

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Icon for Points to Remember
  • Decide on the kind of car you want and research the car’s current price, whether you’re going to a dealer or buying online.
  • You may get more for a car by selling it than using it as a trade-in.
  • One-price car dealers offer realistic sticker prices and no haggling.
  • If financing a new car, a shorter-term loan with larger payment amounts will save money in the long run.

Insurance Considerations

Regardless of where you live, certain types of auto insurance are required. The following is a list of some required and optional coverages:
  • Bodily Injury Liability — pays for medical or death expenses resulting from an accident in which you are at fault.
  • Property Damage Liability — pays for repair or replacement and legal expenses for property damaged in an accident in which you are at fault.
  • Personal Injury Protection — pays for expenses resulting from injury or death to you or your passengers, regardless of who is at fault. This coverage will also pay a death benefit to the deceased’s survivors.
  • Uninsured/Underinsured Motorist Protection — pays personal injury or death benefits if you are in an accident caused by an uninsured, underinsured, or hit-and-run driver.
  • Collision — optional in most states, this pays for damage caused to your car in a collision or rollover, minus a deductible set by the insured. Higher deductibles typically result in lower premiums.
  • Comprehensive — pays for damage caused by theft, vandalism, fire, and most natural disasters. Though optional in most states, banks will typically require you to purchase this insurance if the vehicle you are buying is being used as collateral for a loan. Equipping your vehicle with certain anti-theft devices can reduce your premium.

SouthState offers an easy online application and same-day financing. Want to know how a car loan will affect your budget? Try this car loan calculator.

  • This content is general in nature and provided for informational use only. Content may be used in connection with the advertising and marketing of products and services offered by SouthState Bank, N.A. and its subsidiaries and affiliates. This is not to be considered legal, tax, accounting, financial or investment advice. You should seek individualized advice from personal financial, legal, tax and/or other professionals, as appropriate depending on the specific facts of your situation. We do not make any warranties as to the completeness or accuracy of this information and have no liability for your use of this information.

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