Buying a car is one of the biggest purchase decisions you can make at any given time, and it’s important to get the best possible price. However, dealerships are looking out for their bottom line, and they know exactly what they can do to game you into spending more than you should. To get the best deal for your dollar, we’ve created this guide to help you get your next vehicle as cheaply as possible.
Get Preapproved for a Loan
Getting pre-approved for a loan can seem like a waste of time; however, it can save you thousands of dollars in the long run. Did you know that car dealerships will often jack up the interest rate on a loan that they’ll eventually split with the financial institution? To avoid this, go into the dealership with a preapproved loan offer and see if the dealership will match it. This can save you thousands of dollars in the long run.
Focus on One Transaction at a Time
A lot of people go to a car dealership with the intention of trading in their car for a new one. As the car salesman comes up, they’ll ask if your car is a trade-in. The first mistake most people make is saying, “Yes.” Why? Because many salespeople will low-ball your trade-in while trying to sell you a car for as much as possible. Instead, say that you’re simply looking to purchase a car. The salesperson is more likely to give you a lower offer. After agreeing to a price, you’ll then be able to mention your trade-in (make sure you check it on a site like Kelly Blue Book for a ballpark estimate). This allows you to get the most money for your car while getting a lower price on your new one.
Ignore Add Ons
Dealers will offer you a ton of add-ons, ranging from “free” oil changes to tire protection. These add-ons add up quickly, and many times are severely marked up from what they would normally cost. Instead, simply tell the salesperson you’re not interested. You’re not going to miss these add-ons and you’ll save several thousand off the purchase price.
Don’t Go Long-Term
Long-term loans can seem great on paper. They’re allowing you to purchase your dream car for significantly less per month. Rather than spending three years paying everything off, you can look forward to 6-7 to pay it off. What can go wrong? It’s important to remember that the dealership is looking to make money—and that 6-7 years means they are making significantly more when it comes to interest. Instead, look to pay off your car as quickly as feasibly possible.
While we all may dream of a flashy new car, there are plenty of excellent used models available as well. Used cars, especially those 3 years and under, will commonly offer many of the same features for significantly less than what a new model is selling for. The main thing to remember here is to really research what’s available and how much they are worth. There’s no reason to pay almost as much for a used car as the same car new would cost.
Pay with Cash
While this may seem impossible, paying with cash is an excellent method to get the lowest possible rate. Nothing speaks to dealers more than cash; it’s going directly to them and allowing the purchasing of new inventory. Most will give you their lowest possible price if they know you’re paying with cash.
Check Your Credit
Before going in to purchase a car, it’s important to know your credit score. Do you have a lot of inquiries? Is your credit score in need of some help? Take the time to fix your credit as much as possible before purchasing a car. Next, go in armed with your credit score. If the dealership offers you a high-interest loan, you’ll have the information at your fingertips to explain why you should get a better deal.
Many people go into a dealership knowing exactly what kind of car they’ll want. Some even get as specific as certain colors, trims, rims, etc. However, dealerships see these people coming a mile away, and they’re more than happy to charge these people top dollar to get the vehicle they want. Instead of setting your heart on one specific car, you should be willing to be flexible with your options. Look at a variety of colors, makes and models before making a decision. You might find a car you like even more.
Look at Ownership Costs
That sporty little European number would look great in your garage; however, are you willing to pay the maintenance costs if something goes wrong? What about the gas costs of a large SUV? Ownership cost is an overlooked aspect of car ownership; however, it can save you thousands of dollars in the long run. By knowing exactly what you can expect to spend, you can plan on whether or not a car is right for you.
Do you want the latest model every few years? Want a cheaper payment? Leasing might be for you. While you won’t get the equity that comes with ownership, you won’t need to worry about a lot of things that can possibly go wrong with the car. The best part? If you love a car, you’ll have an option to purchase it after the lease is over.
Purchasing a car is one of the biggest decisions you will make. In order to get the best possible price, you need to follow certain steps, including getting pre-approved for a loan, being flexible with what kind of car you will buy and looking at the actual ownership costs. Whether you decide to get a used car that you know will be reliable at a discounted price or a brand new sports-car for those weekends away is up to you; however, by following the tips above, you can get the best price on your next car.