If you desperately need transportation but are low on cash, there are many ways to save money when buying a car. And some in particular that you may not have considered. In fact, saving money on your next car purchase is easier than you probably expected. All it takes is some research and decision making prior to purchasing your next car.
By following these tips, you’ll feel more confident the next time you are at the dealership — and you’ll save a little money too:
Research what kind of car you want online. Figure out which feature is most important to you, whether it is great gas mileage, safety, speed, or size. Then narrow your options down to just three or four choices.
Shop online. Finding the best deal on a car is extremely easy if you use the Internet because it allows you to compare prices. Most dealerships post their cars online as well, so you can find out if the car dealership has cars within your price range prior to visiting.
Check the Kelly Blue Book. Once you have decided on a particular set of cars that you want to consider purchasing, look them up on the Kelly Blue Book to find out how much they usually cost. Print off the page in case you need to show it to the car salesperson.
Check competitor car advertisements for low prices. Print them out and bring them along when you head to the dealership. If you show salespeople the competitor prices, they might match them for you. Bring as much evidence as possible to prove to the dealership that you should be able to buy the car at the price you want.
Try not to seem desperate when talking to the car salesperson. Remain non-emotional and be rational. Do not let the salesperson talk you into purchasing something you cannot afford or do not actually want.
Negotiate the final price of the car rather than monthly payments. One of the sneakiest and most profitable tricks car salespeople use is to lower your monthly payments but increase the final cost you’ll pay for the vehicle.
Plan out how you are going to pay for the car before heading to the dealership. You never know if the dealership’s financing options are going to be right for you. So compare prices and car financing options online.
Save up some cash so that you can make a larger down payment. If you make a big down payment, you’ll be paying less interest to the dealership. This will significantly lower the total cost of the car.
Consider buying a used car. Purchasing a used car instead of a new car can be a smart move financially. In fact, it’s really the best option of them all! Although buying a new car is sometimes necessary, it’s not a very good investment because the value of cars decreases very quickly. Used cars are much less expensive than new cars — even when they’re in perfect condition. Best of all, financing for used cars is available online and at most dealerships.
Photo Credit: Eric Chan
Hi Len, Most of these tips are great, but I’ll have to disagree with the author on #4 and 5. One of the worst things you can do when buying a new car is to go to the dealership to haggle. Once they have you at the dealership you are a captive buyer and not likely to move on to another dealership (even if you brought a few print outs).
A much more effective approach is to pre-negotiate car price before ever stepping on the lot. If you actually email dealers and make them compete with each other on price (instead of just grabbing their ads), you can systematically reduce the price of a new car.
Im only interested in used car .. if a used car is going for $5500 and you walk on the lot with $4500 cash but tell the dealer you have $4000 take it or leave it .. more than likely youll walk away buying it for $4500
Cash is king
I recommend saving regularly in a special fund, so you can pay cash for the car! It’s not as hard as you would think.
The easiest way to get the best deal is to email the Internet Sales Manager and ask them what their best price is. Their compensation is based on volume, not sales price; the floor salesman, however, is paid his commission based on profit for the dealer.
You should NEVER pay more than $500 over invoice; in the case of less popular brands (i.e. Infiniti) you can get one for thousands under.
Overall I would agree with these suggestions. I also agree with Todd about emailing the internet sales manager instead of trying to negotiate with people that negotiate for a living.
We only will buy used cars mostly due to the depreciation, but also because of insurance rates and the fact they are cheaper. When we bought our most recent car the dealer already had it listed below book value, so it was hard on our part to negotiate it further (mostly because it was our first car purchase and we didn’t do more research because the car we initially did the research on wasn’t the one we ended up buying, but it was over an hour away to even find the car we wanted). But as it turned out, we moved to another state and our car actually become more valuable than when we purchased it (one of the few that exist).
At least I have the privilege to drive a nice car at 30, went to engineering school and deserved it. In 5 years my Audi will be mine. 🙂
Another great tip for those that want a new car — look for prior year models. My wife and I bought a BRAND NEW 2011 mini-van (only 43 miles on it, never titled) for nearly 40% off of the sticker price. I thought I was lucky finding this, but did some online research and found 4 nearly-identical 2011 models within 50 miles. It takes some effort, but it’s worth the time.
The tip I can share on saving money on your next car purchase is to realize that everything is negotiable. There is nothing wrong in doing it. So we’d better try our chance in here.
The best way to get awesome financing is to join a credit union, then get a quote for rate from the CU and 2-4 other places. Have contact names and phone numbers and every time the dealer finance guy says “the best deal I can offer you is X” get one of your contacts to match or beat it. By the time most folks have fought and worked to get the price down they really don’t want to haggle over financing. But I saved 4% on my real rate by calling the finance dept’s bluff several times. It let me keep the payments low enough that I could afford to pay an extra $125 toward principal every month. The loan was for 60 months and it was gone in about 27 months.
I’m surprised no one has recommended one very good money saving option – buy an almost-new car from a major rental company.
On the plus side, they are usually fairly low-mileage and have had regular maintenance. The rental company takes the hit on depreciation, which isn’t as much for them when they buy cars by the thousands instead of single units.
On the minus side, a particular rental may have been used by a renter who opted for the extra insurance and the “drove it hard and put it away wet.” Services like Carfax might help you avoid these by VIN.
Unfortunately, rental cars don’t have manual transmissions, which is a deal-breaker here.
I mentioned this plan to a young country lawyer I met, and he said “I know, this is a former rental.”
I’m with you, Tom! I only drove cars with manual transmissions until I was 50. They are fun to drive.