New Vehicle Buying Guide | The Insurance Center

Buying a new car, truck or SUV is a big decision that requires time and consideration before making a purchase. Before deciding to buy a new vehicle, remember these tips to help ensure you don’t experience buyer’s remorse.

  1. Stay within your budget. Before getting your heart set on a vehicle beyond your financial means, keep your budget in mind as you shop.

Begin by figuring out what you can comfortably afford each month, including interest, insurance, and principal. Experts typically recommend that you spend no more than 10 percent of your gross monthly income on payments.

When negotiating the price of your new vehicle, stay focused on the purchase price and not the monthly payments. These can be manipulated to make it seem like you’re getting a better deal, when you may actually end up paying more. Don’t be tempted by another more expensive model or features that you don’t need, like maintenance or extended warranties, which can be disguised in “lower” payments over a longer period of time.

You may also want to decide how much you can afford for a down payment. The typical recommendation is approximately 20 percent of the vehicle’s price. If you decide to buy, or finance, keep in mind that the longer the loan, the more you will pay in interest, so try to stick with the shortest term possible. Use this online loan calculator to help determine what you can afford.

  1. Research your options before heading to the dealership. To determine what will best fit your needs, check manufacturers’ websites to learn more about different models and their features. Keeping your budget in mind, create a list of must-have features, check reviews and ask one of our insurance agent’s how each model may affect your existing policy. Other factors to take into account include the vehicle’s primary use and functionality, and the new monthly expense.

Decide where to buy, like a dealership, personal connection, or online, and get quotes from multiple sources. Use these to your advantage when negotiating the price.

Consider an older model to possibly get a lower price. When new cars are released, the prices of the older models being replaced or upgraded usually drop. Also, new cars depreciate in value much faster than used ones.

  1. Know what you’re really paying. Keep the following terminology in mind:
  • Manufacturer’s Suggested Retail Price (MSRP) or Sticker Price: This is the price that manufacturers recommend dealerships sell each vehicle at. Dealerships can choose to charge more or less since this price is “suggested.”
  • Invoice Price: This is what the dealership pays the manufacturer. You can ask to see the invoice price and negotiate against it.
  • Market Value Price or True Market Value: This is the average amount that other buyers are paying.

In addition to your monthly payments, consider the ownership and operating costs, like gas, maintenance, insurance, registration, and taxes.

You should ask the dealership or seller for a detailed price quote, which breaks down all fees, including registration and documentation.

  1. Take a test drive before you begin any negotiations. Even if you prefer to handle all aspects of burying your new vehicle online, take your top choices for a test drive. You may find that the car you thought you wanted doesn’t feel like you thought it would. To test it longer, you may also consider renting the model you prefer.


  1. Before making any commitments, secure financing and compare incentives. Check with other lenders, including banks and credit unions, for competitive interest rate options and even for pre-approval on a loan, which you can then use for bargaining.

Apply any discounts you qualify for, and discuss the value of your trade-in after negotiating the price of your new one.

If financing a new car isn’t an option right now, you can also consider leasing, which typically costs less than buying. Overall, it is important to consider that if you need to spread your payments out over a long-term loan, typically five years or more, you may need to rethink your purchase or reevaluate your budget.

Once you have purchased your new vehicle, talk to The Insurance Center to make sure you have the right protection for your new investment. Call us to learn how your current insurance may change or to take out a new policy.  The Insurance Center staff can determine the auto insurance coverage that’s right for you. Call (252) 637-4173 or visit our website at to get a free online auto insurance quote.

Source: Kemper Corporation