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When you think of your least favorite things to do, the process of buying a car is probably up there on that list. Who wants to deal with a pushy sales person or car payments you were not expecting?
Unfortunately, buying a car is something most of us have to face several times throughout our lives. Here are some strategies that can not only save you money, but help the car buying experience go more smoothly and efficiently.
1. Do Lots of Research
Before you buy a new or used vehicle, you need to do your research on it. Do not expect the dealers or sales people to be up front with you on everything. They cannot answer your questions if you do not have any.
Start with narrowing down the different makes and models you are interested in purchasing. If you are having trouble narrowing it down to a specific brand, you should start even broader and look at the type of vehicle you are interested in buying. For instance, you could be looking at a Sedan, Coupe, Micro, Hatchback, Sports Car, SUV, Minivan, Truck, etc.
Once you have decided on the style of vehicle you want, you can research that type of style and see which brands have the best ratings. You may even find during your research that you originally wanted one type of vehicle, but another type meets all of yours and your family needs even more.
Another result of doing research is that it will give you an idea of what vehicles are currently priced at and you can determine what vehicles you can afford.
2. Don’t Let them Know You have a Trade-In
If you have a vehicle that you are interested in trading in on your purchase, do not let the sales person know that from the beginning. You are going to want to treat buying your new vehicle and trading in your old vehicle as two separate transactions.
Sales people love grouping the sale of your vehicle along with your trade-in because dealing with multiple sets of numbers can be very overwhelming to you as a buyer. Instead, focus on getting a great price for the new car. Then, you can mention your trade-in and see what the dealership will offer you.
Remember that a dealership is there to make a lot of money, so you probably will not get what you truly want for your trade-in. You can do your research and see what your car is valued at using either Kelley Blue Book (KBB) or the National Automobile Dealers Association database (NADA).
One other suggestion in regards to your potential trade-in is to get written offers from other dealerships and use that as leverage when trading in your car. If your trade-in appraisal comes in low at the dealership you are looking to purchase your vehicle from, you can show them your written offers and hopefully they will match the offer or at least raise their lower offer.
If you decide what you are being offered for your trade-in is not enough or a fair price, you should consider selling the vehicle yourself. Luckily, multiple tools nowadays can help you sell your vehicle privately.
3. Get Multiple Quotes for the Same Vehicle
If you really want to compare apples to apples in the vehicle world, you should definitely get multiple quotes from different dealers for the vehicle you are looking to purchase. You can do this either online or in-person.
Dealerships love competition and as a result, you as the buyer can reap the benefits. It is up to you, but you can even let the dealers you are getting quotes from know that other dealers are also involved. This added pressure can help to get you their best price.
4. Use Your Phone at the Dealership
Your phone is one of the most powerful resources you can take with you to a car dealership. The reason is you have the internet at your fingertips and any information your sales person says can be confirmed by you using online resources.
Make sure to download the Kelley Blue Book or Edmunds App before heading to the dealership. You can see in real time what the average price of the car you are looking for is being sold at. If you do not like using apps, just access those websites on your mobile device. You could save hundreds and even thousands of dollars knowing this information.
5. Don’t just look at monthly payments
Have you visited a car dealership recently? If you talked to a sales person, you probably noticed that they asked you what you can afford each month. Most sales people do not even focus on discussing the final price of the vehicle with you, only your monthly payment. There is a reason for using this tactic.
Auto loans used to last an average of 60 months or 5 years. Today, more and more lenders are allowing their loans to extend even further, sometimes up to 84 months or 7 years.
If you tell your sales person you want a car payment of $400 or under per month, they will probably try to get you into a vehicle you thought you could not afford by extending out the length of your loan.
An example of this tactic would be showing your sales person a vehicle that has a sticker price of $20,000 hoping for a monthly payment of $400. They then show you an upgraded version of the vehicle with a sticker price of $25,000, but tell you that you can get it for around $400 per month. The downside is that your loan will have to be extended another year or so, but they will not focus on that part.
Credit Karma offers several tools that can help prepare you for an auto loan no matter how big or small. Being prepared before getting a car loan is so important and can save you thousands in the long run.
6. Test Drive the Vehicle
Your vehicle purchase is a big one so you are definitely going to want to take it for a test drive before purchasing it. One of the big reasons why you want to take your potential vehicle for a test drive is because you want to be comfortable driving it.
When you take your car for a test drive, your sales person will help you focus on all the features that are in it, but you are going to want to focus on the driving part. How does the car handle? Does it accelerate and brake easily?
Your sales person probably has a specific route they have every potential buyer take on their test drive. Many times the test drive route is back roads. But if you typically drive on a highway or interstate every day, ask your sales person to let you drive on a nearby highway or interstate in order to get a real feel for the car and how it would actually be driven daily.
7. Don’t be afraid to say no
So you test drove the car, negotiated the price down and even worked out a trade-in. You still are not feeling the deal and want to think about it more, but the sales person is pressuring you. Do not be afraid to say no and walk away. I know you probably are thinking about the time you wasted and the wasted time of the sales person.
Guess what? You have to live with the vehicle, its maintenance and the payments for years to come. The decision of purchasing a car is something you should never rush into or feel pressured into purchasing on the spot.
Here is a real life example and how we benefited. We were at a dealership and after negotiations, decided to walk away and think about it. Before we walked away, the sales person went and got their manager who tried to guilt us into buying the car right then and was super rude and pushy.
We got up and left and then texted our sales person. We explained that they were great but we did not feel comfortable working with their manager. They took our complaint to their district manager who gave us more off the car and a better trade-in just because they did not want to lose us as potential customers.
8. Most people do not qualify for the advertised price
If you have done any car shopping recently or are planning to, you will notice that the advertised price of a car, especially online, is not the true cost that you will qualify for. The “internet” or “sales” price that you see online typically includes every single dealer and manufacturer rebate.
Most potential buyers will not qualify for the advertised price of a vehicle. Sure, you may qualify for one or two discounts, but you will definitely not qualify for all of them. It is important to know this fact before visiting a dealership expecting their advertised price. You can compare multiple dealerships’ lowest advertised price and see what discounts each offers. Maybe you can get a dealership to match or beat his competitor.
9. Try to find every rebate and incentive
A sales person will ask you a series of questions, trying to see if you qualify for any rebate or incentive. This discount mainly comes from the manufacturer, not the dealer. The dealer may make you think that the discount comes from them, when in reality, it comes from the manufacturer hoping to motivate you to buy a certain make and model of a vehicle.
Most manufacturer rebates and incentives are given for new car purchases. The reason why you need to research rebates and incentives is because they are given for only certain vehicles. If you have done your research, you may walk into a dealership knowing what make and model of a car you are interested in because of the incentives offered.
However, if you do not know what cars have rebates and incentives, you may miss out on scoring a great deal on a great car. Your sales person may try to push a vehicle on you that has no rebate or incentive and you would not know any better. Dealerships have certain quotas and the car that they are pushing on you may meet their quota, but may not give you the best bang for your buck.
10. Skip the extra features you do not need
Having options in your car are nice, but many of them you really do not need. Not only will extra features cost you more in the long run, you probably will not even use the extra features. If you are thinking about resale value in the future, having extra features typically do not hold their value well and will not make much of a difference in the value of your car when you are looking to sell it.
11. Check into insurance costs
This is an important factor when you are looking to get a new or used car. Depending on the type of car you are purchasing, your auto insurance premiums could increase or decrease. You need to check with your insurance company and get a quote for the vehicle you want to purchase. You can do this before buying your car. If your auto insurance skyrockets, then maybe you should look at buying a different car.
12. Car salespeople can be manipulative
A typical car salesperson knows that when you come into a dealership, time is their number one weapon. This is why the process of looking at the different cars in the lot, test driving one or more, going over numbers, looking at your trade-in and getting other management involved is a long process. By the end of it, they know you will be tired, hungry and worn down – making you more vulnerable.
Many salespeople will try to pressure you into buying the car today saying things like “You’ll miss out on this big sale” or “Someone else is looking at this car and I cannot guarantee you it will be here tomorrow.” Do not fall into their trap of thinking you have to buy your car right then and there because you do not and the sale will probably be good for days to come. If someone else buys the car, there will be other cars so do not worry about that.
13. Look at Financing Options
Before you even head to a dealership, check into your financing options if you are not paying cash for your vehicle. Even if you are thinking about paying cash, it may make sense to consider financing if you qualify for a great rate.
Once you have the rates that you qualify for outside of the dealership, you can compare them to the rates that the dealership can offer you. A dealership is not required to tell you the cheapest loan that you qualify for and this is why it is so important to check with a bank or credit union and see what they can offer you.
Your credit score plays a huge factor into determining what financing you qualify for. Credit Karma is a great company to obtain your free credit score.
14. Timing is important
Timing really is important because a dealership could be trying to get rid of last year’s models to make room for new ones. Or, they could be trying to make a quota near the end of the month and need a few more sales to push them over to qualify for incentives from the manufacturer.
If you can, try to make your purchases near the end-of-the-month or end-of-the year and get the best deal possible. Sales people and dealerships are more likely to be flexible with you at these times.
15. Try to buy at or below Invoice
A dealer invoice price is the price that the manufacturer charges the dealer for each vehicle. Anything over invoice is typically profit for a dealer. You are probably thinking if I pay only invoice, how does the dealer make money then? Many times manufacturers offer all kinds of incentives to dealers for selling their vehicles, making it still profitable for dealerships to sell at or below invoice.
You as a buyer can request to see an invoice and the dealership may or may not show you that information. You can also research invoice prices online and typically it is pretty easy to find average invoice prices.
16. Be pleasant
When you first enter a dealership and start working with a sales person, do your best to be pleasant and kind to them. Shower them with many different compliments. The reason is because the sales person will do their best to get you a great deal.
Being kind and pleasant can even work if your negotiations are done online or over the phone. Just like anything, sales people are more inclined to go out of their way to help you if you are kind to them versus complaining and being awful towards them.
17. Ask for extras from the dealership
Everybody likes freebies. Once you have finished negotiating a price that you are happy and satisfied with, you can even go further and ask for smaller things for free like upgraded floor mats or maybe even oil changes for a year. All these extras can add up quickly, so it never hurts to ask. Maybe you can get the dealership to give you one thing on your list. The worst that could happen is the sales person or dealership could say no.
18. Prepare to deal with the finance manager
After you have agreed on a price with the sales person and they shake your hand, you are not done yet. You still have to go to the “back room” and deal with the finance person or manager.
The finance person is also a sales person and will attempt to push additional options on you that you do not need. They will try to sell you their dealership extended warranties that will cause your overall price to drastically increase.
They will also be the one who deals with your financing options of the vehicle you picked. This is where having done your homework on finance options and what outside rates you qualify for is extremely important. If you rely only on the finance person to give you your rate options, they will try to push the finance companies that they like and the ones that they have agreements with.
19. Don’t talk down payment right away
You know that you have money to put down on a car, but wait to tell the sales person that you have money to put down. The reason is because you do not want to give them all the leverage and power right in the beginning. If they know you are putting down $6,000, they can start manipulating the price of the vehicle or even working around monthly payments trying to get you into the highest priced vehicle.
20. Buy a vehicle you truly can afford
After all your research, negotiations and back-and-forth between dealers, you have finally found the car and the price that you are happy with. The bottom line is make sure you buy a vehicle that you truly can afford. A dealer will not ask you how your monthly payment will affect other aspects of your financial situation.
After looking at your budget and finances, you may find that the “perfect” vehicle is still too costly. You may be able to afford the $450 month payment, but you no longer can save for emergencies, retirement or have discretionary money each month. You have to figure out your financial priorities and then you can make an educated decision.
Bonus: Sometimes it makes sense to buy New vs. Used
So, you have been debating between buying a new or used vehicle. Both have pro and cons. We have all heard that a new car loses a lot of money when you first purchase it and drive it off of the dealership’s lot. Well, there are definitely times that it makes sense to buy new, especially in today’s market.
There used to be a huge price difference between a new and a used car that is one or two years old. Now, with so many manufacturer rebates and dealer incentives, new cars are priced very aggressively, making them almost the same price as a used car that is a year or two old.
For almost the same price, not only do you get a new car, but you get all the warranties that come with that car from the manufacturer. This peace of mind could easily help you make the decision to purchase a new car. Sure, a used car can have warranties as well, but they typically are not as good as the warranty that comes with a new car purchase.