Take the pain out of car shopping

I’d rather get a root canal than go car shopping. How to choose among so many models, options and financing alternatives? But it’s worth a little homework to make sure you get a car you like and can truly afford; plus, you can save you thousands of dollars over the car’s life. Here are a few tips:

What can you afford? Look at your monthly budget and determine how much you can comfortably spend on car-related expenses. If you’re forced to sacrifice other essentials like savings for retirement or college, you may need to forego your dream car for now and buy something more practical.

If you don’t already have a budget, Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., (www.practicalmoneyskills.com/budgeting), shows how to set and follow a budget. The site also features “Buying a Car,” a complete guide to financing options, evaluating credit, negotiation tactics, and much more.

Hidden costs of car ownership. Even if you pay cash, don’t forget additional expenses that can significantly impact your budget – things like insurance, registration and emission fees, sales tax, maintenance and repairs, and of course, gas.

Know your credit rating. A mediocre credit rating usually translates into higher interest rates and lower loan limits. You can order one free credit report a year from each of the three leading credit bureaus (Equifax, Experian and TransUnion), through www.annualcreditreport.com. Order one at least a month before you shop to ensure you have time to correct mistakes.

Arrange financing first. Many lenders will pre-approve you for a loan amount based on your income and credit history. Even if you ultimately go with the dealer’s financing, it pays to know what you qualify for first. Try your credit union or bank, but also compare rates on www.bankrate.com.

Do your research. Find out in advance the invoice price (dealer’s cost, minus incentives) and bargain up from it, rather than down from the manufacturer’s recommended “sticker price” on the window. You can research invoice amounts online at such sites as Kelly Blue Book (www.kbb.com), www.edmunds.com, and www.cars.com.

If you’re not up for a lot of research, Consumer Reports offers a New Car Buying Kit for a small fee, which shows target prices to aim for, provides reviews, and does side-by-side comparisons of different makes and models. Go to www.consumerreports.org.

Take your time. You’ll be living with this car for years, so don’t rush. Get the dealer’s best offer in writing, then call your insurance agent for a quote – and sleep on it.

Trade-ins. If you need to sell your current car to buy the new one, treat that as a separate transaction (just as financing is separate). Or, sell it on your own.

New vs. used. New cars lose 20 percent or more of their value the minute you drive off the lot. A late-model used car may provide most of the features you want for considerably less. To make sure it’s not a lemon, however, obtain a Vehicle History Report, available from www.carfax.com and other sites for a small fee, which traces the car’s history by vehicle identification number on a nationwide database.

Buying a car doesn’t have to be an ordeal if you do your homework and keep the rest of your financial obligations in mind.