Car Shopping: Setting a Target Price

Setting a realistic target price, whether you’re shopping for a new or used vehicle, can make all the difference in knowing exactly what you can afford. Target price is how much you’re willing to pay for your vehicle. Target payment is how much you’ll pay monthly towards that. When shopping for cars, many people think only in terms of what they can afford to pay each month and not the grand total of all payments. To ensure you do not spend more than you planned, it’s vital to consider the overall cost, including interest, and research the options that match your target price.

Before you visit a dealership, compare prices for the same make, model, year, mileage and trim from several sources. This will give you a realistic range for your target price and can help you recognize when a vehicle is priced above your budget. Be sure to look at the total cost, not just the sticker price, because taxes, title, registration and dealer fees can change what you pay.

When setting your target price, choose a number that leaves room to negotiate. If your maximum comfortable price is one amount, consider shopping for a lower priced vehicle so you have flexibility without going over your budget. It is also useful to separate the deal into parts: first, negotiate the vehicle price, then discuss trade-in, add-ons, and financing. Breaking down the deal can make the numbers easier to understand and help you avoid paying more than you intended.

Be mindful of optional products and add-ons, such as extended warranties, protection packages, or service plans. Some may be useful, but they can quickly push the final price above your anticipated spend. Ask what each item costs, whether it is required, and how it affects your total amount financed before agreeing to it.

Finally, leave room in your budget for the costs that come after the purchase. Insurance, fuel, maintenance, and repairs can affect affordability just as much as the purchase price. If the numbers do not fit comfortably within your target price and target payment, be prepared to reevaluate your preferences or walk away. First Harvest offers convenient auto loan calculators to help you better understand the costs associated with your upcoming auto purchase, as well as flexible auto loans that fit your lifestyle and budget.