How to Save Money on a Car

Shopping for a car can be tough since the dealer usually has all the advantages. Usually, the buyer feels like the deck is stacked against them. Sometimes you might be better off repairing your car before you go into debt to buy a new one. If the amount of repairs are out of the question, here are some tips on how to save money when purchasing a car.

Get Your Financing in Order

Although we all wish we could pay cash for cars, it is not always possible. Many people don’t realize that shopping around for financing can save you a great deal of money. The dealership is certainly not the only place where you can get new car financing. Shop around and know your credit score before you start. This way, there are no surprises when you are trying to get a low interest rate. Your APR will be determined by your credit score, so make sure your credit report is accurate before you shop.

Never Negotiate Based on Monthly Payment

Do not fall into the trap of negotiating your car price based on monthly payment. This will extend the length of your car loan. The dealers can get the monthly payment down to just about anything using this method, while hiding the fact that you are being overcharged for the car. Always negotiate based on the interest rate of the loan and the actual price of the car, without extras being stuffed into the deal without your permission.

Negotiate your Car Purchase

Shop around using internet sites for car prices that are considered fair for the make and model you are interested in buying. Once you have determined the price of the car that you are interested in buying, ask the dealer for the out-the-door cash price excluding rebates, incentives or trade-ins. The price should include all dealer-added fees. At the beginning of the negotiation, don’t let them use your trade-in or financing as part of the negotiation. Tell the dealer that you prefer to pay cash and that you have decided to sell your current vehicle on your own. You can change your mind about the trade-in and negotiate that part, as well as the financing later in the process.

Start shopping around at other dealerships for similar cars. Mention the price you were offered at the last dealership. Do this until you are satisfied with the price and quality of the vehicle you are interested in buying.

Beware of Fees

Finally, beware of any add-on charges or fees from the dealership. Also, look over your paperwork and make sure your trade-in price is correct. If you see a discrepancy or wish to question any ambiguous fees, tell them before you sign any paperwork associated with your purchase. Have them correct any discrepancies before you sign.

And there you have it. These tips should be very helpful to you when purchasing your car. Remember, never be afraid to shop around, and use the information to your advantage, which is the key to success in car negotiations.

Bio: John knows a lot about cars, and also financing because works for a car dealership. His company specializes in assisting people when they ask “How can I sell my car”?

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Comments

  1. says

    Make sure you set a target price! A lot of times people go car shopping without first knowing how much money they can afford. If you don’t plan out your budget and you are looking at cars that are out of your league you can get yourself into a jam. If you fall in love with a car at first sight, which really does happen, you can end up purchasing it, and accumulating a lot of unwanted and unnecessary debt. On the other hand, if you give yourself a budget you will know which dealerships you should visit, and which ones you should avoid.

  2. says

    When ever trying to purchase a vehicle through a dealership whether it is new or used, your at the mercy of the salesperson. They know all the tricks to get the most from you and your wallet. If you have a trade in you can figure you won’t get your price. Dealerships are in business to make money, this is the reality of this situation.
    Frugal and smart buyers at times do consider automotive buyer’s brokers. These people work for you at a fee. There is no incentive from them to increase the purchase price. Usually 50% of the broker fee is required up front. But if nothing is purchased you should get all your funds back if dealing with reputable buyer brokers. Their incentive is to get you the best vehicle for the best price available. In some cases purchasing a vehicle through a buyer’s broker is like purchasing the vehicle from the manufacturer bypassing the middleman (dealerships) completely.

  3. Jeff Crews says

    I think one of the biggest things in buying a new car is finding the right amount of car insurance an saving on it. Many times people get stuck in the rut of just paying their insurance without taking a second look. A simple car insurance comparison could save a new car owner a lot of money.

  4. Francoise says

    I am stunned that you don’t mention one of the easiest ways to give yourself the negotiating advantage. For $20 Carcost Canada (carcostcanada.com) will give you the dealer invoice price (this is what the dealer pays the manufacturer for the car) and all current manufacturer incentives. Car dealers know that buyers are using this tool and if you walk in saying you pricing based on CarCost Canada the negotiating automatically starts from there, not from the sticker price. It’s not a huge margin. You might be surprised to find that dealers don’t make a lot of money on each car, less than 10%. But iIf the dealer isn’t willing to work with you, go elsewhere. Never start at the sticker price. Also be willing to buy off the lot and the previous year’s model, if still available.

    I saved about $1000 on my new Fit. For another car, I probably could have saved more but the Fit is not manufactured in huge numbers and hence is in demand. As well, as an example, the Japanese earthquake delayed the 2012s by six months. Not surprisingly, Honda is tougher on price. Know the market, know the car and most of all know the real cost. And never forget to negotiate for options. If you’re buying off the lot, you’ll get a better deal and in that case, negotiate for winter tires or dealer-installed options, like a roof rack.

    Most of all, never sign on the first visit. Always walk away, even if you know you want to buy. Guaranteed, the salesperson will be calling you back.

  5. says

    Another tip is to apply for credit via your credit union or personal bank beforehand. Shoppers can also research prices online by using Kelley Blue Book and comparison shop via the net in order to see what other dealers are offering for vehicles of the same make and model with similar mileage.

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