If you’re ready to buy a new car instead of a used one, you may want to be privy to several different ways to save money on that big purchase. For example, you’ll want to research the type of car that you’d like to purchase, look online for deals or incentives on your preferred cars and you may also want to use a car broker to help you purchase that vehicle. Here are four additional ways to save money when buying a car:
Save Up For a Large Down Payment
The more that you can pay upfront, the less that you’ll have to pay over the next several years. If you’re buying your first car and you don’t have much of a credit history, you may be required to make a down payment of $500 or more to get a good interest rate. However, even if you have good credit, an immediate down payment puts equity into the car, which makes it easier to sell if you have a financial emergency in the future.
Check Your Credit and Get Financing Ahead of Time
Regardless of your credit history, check your credit report to ensure that it’s accurate. Creditors and others may make mistakes that could jeopardize your chances of getting a loan. Before you go to the dealer, get financing from a local bank or credit union as you could get a better rate. Additionally, you’ll go to the dealer with leverage that you can use to save money on your loan.
Bring Someone to the Dealership With You
Salespeople may use a lot of tactics to make you think that you’re getting a good deal while they are only increasing their bottom line. For instance, you may think that extending your loan and lowering your monthly payment is a good thing for your budget. However, the interest that you pay helps the lender make more money over the life of the loan. Therefore, it may be a good idea to bring someone who has bought a car in the past to help you determine if you are getting the deal that you want.
Make Use of a Car Buying Service
Using a new car broker can help you save money on your next car while ensuring that you get exactly what you want. The best part is that you don’t have to negotiate the terms of the purchase yourself. If you’re going to use a new car broker or any other third-party car finders, you should make sure that you are working with someone who has your interests in mind. You’ll also want to shop around to ensure that you aren’t paying too much for the service, which could negate any price savings you receive on the car.
If you’re in the market for a vehicle, you need to educate yourself as much as possible before putting an offer on a car. This can help you find the best price, best financing and best negotiating tactics available when car shopping. Best of all, it can help you get the car you want without a lot of drama or stress.
Photo Credit: jonrawlinson
Great article LP…I also use a few other tips when shopping for a vehicle (used primarily).
Tip #5 Pay cash. Paying in all cash gives you the power at the negotiating table and along with that…
Tip $6 Never shop for a vehicle that you can’t walk away from. Always be willing to walk away with nothing but the money you came in with. This will give you a lot of leverage.
My best tip is to never let the salesperson know that your single car family, and the reason you’re buying is because your previous car was totaled. Don’t ask how I know.
I read a book years ago on car buying. I never forgot this one statement. People who are related to the car salesman, or friends etc, often think they have an in and are going to get a deal. Apparently, the opposite is true, you are looked at as a landed fish. When you leave the dealership thinking you got the deal, that just shows how good they are at their job of selling, and nothing wrong with admiring a good salesman/woman.
I had to make an emergency purchase about 18 months ago as my wife needed medical appointments several hours drive from home, winter, snows, we live rural etc etc. My trade in was a 2002 GMC Sierra. A good work truck. They tried to jerk me on the trade so nixed it and gave the truck away to brother in law. It was in primo condition. Made the deal for cash on a new 4X4 Nissan truck which I could also use for my side work.
On the day I went in to sign and pick up the truck they raised the ante on the trade. They wanted my truck to re sell as it was in new condition. Too late I said and pulled out the bank draft and drove away. I know I did not get a ‘deal’. But I didn’t get hosed or feel like I got shafted. So it must have been okay. 🙂 You will never get a deal, but you can save by paying cash, or arranging other financing. These people are smart and live by their wits. Do your research, don’t be a lookie loo, know what you want and what you can pay, and be prepared to walk.
Watch out for dealership servicing. They usually do all kinds of extra add on servicing crapola. Any certified shop will fulfill your warranty. Find a good mechanic/shop and support them.
It took me a while to learn that a truly “good deal” is only when both parties walk away happy. I learned that lesson the hard way when I was younger; I beat down an irrigation contractor on his price until he finally relented. I was happy at the time; he was not.
Anyway … long story short: I thought I got a good deal, but the contractor compensated for the paltry price by using substandard pipes. I then spent the next several years replacing all of the leaky and/or burst irrigation pipes with higher quality stuff – and I ended up doing it by myself because funds were tight at the time. Expensive lesson learned!
I used a broker once and it took 6 months for him to get the car. I had already bought one and he sent me a letter saying he would give me my deposit back, changed his mind took him to small claims court and won.
Sorry to hear that, John. Although I have never used a car broker, my late mother-in-law used them to great success.
Forget buying online “in the comfort of your home.” You’re paying extra for the comfort. Go online and find several of the vehicle you want. Search dealerships as far away as 2-3 hours drive. Compare prices. Ask for discount, and get total amount needed to drive out the dealership door over the phone.
Next go shopping in person late in the month when the dealerships may need to make a quota. January and February are the best months to buy vehicles as people are not buying because of the bills from Christmas arriving. NEVER, NEVER tell them if you are paying cash. Inquire about dealer financing which is where they make tons of money. After test drive sit in salesperson’s office and discuss vehicle and get price from sales person. Offer much less and have salesperson discuss with manager (Bring a book!)
Salesperson will come back with better price. Send them back for a further discount. If they don’t negotiate then reluctantly leave telling them you like the vehicle but if only they would take $X. you would make the deal. They will call you in a couple of days and renegotiate.
If you are a woman have a man with you. After you have negotiated price let man make lower offer and usually it will be accepted. As a test I’ve gone into dealerships and gotten “The absolute lowest price.” Invariably if I come back with a man the next day the price is lowered. I don’t let this bother me because it isn’t important since my male companion will get the best price for me.
Be prepared, walk, and they will often call you back and negotiate.
After getting price in writing you can tell them you are paying cash and not financing.
Always use credit card for as much of the deposit as they will allow. Used to be $5,000. now about $2,500. in order to get miles or cash back. (I’m a miles junky!)
Look over vehicle carefully and get credit for scratches, dings, damage.
Using all above techniques I once negotiated a deal so good on a mini van that when we got home after signing the paperwork there was call from dealership trying to get me to give a check instead of the $5,000. they had accepted by credit card because they were not going to make any money on the deal. (I think they were exaggerating!)
If they offer you $1000. discount for buying with dealer credit when you planned to pay cash, LOOK OVER THE CONTRACT FOR THE LOAN. If there is NO prepayment penalty, take the deal, make one payment and then pay off the loan in full. This way you get the $1,000. discount and only have to pay the minimum one month amount of interest to get the price. Even if the interest on the one month is $50. or $100. you are still $900. or $950. ahead! JUST MAKE SURE THERE IS NO PREPAYMENT PENALTY!
Great tips, Karen. all of them! (As usual.)
Thanks for sharing them with us!