Buying a car is a huge purchase and an investment meant to last for years. Don’t let yourself get talked into spending more than you can afford. There are some basic strategies that will help you make good choices and get the best deal you can.
The Biggest Markup
The easiest place to save the most money has nothing to do with the car itself. Financing is where most car dealerships make their biggest payoffs. It can’t be stressed enough that when you go to purchase a car, optimally, you will have the money in hand.
Taking a loan is a tremendous waste of money, no matter what the terms are. Of course, if you have to take a loan, fight for the lowest interest rate, and shortest term you can afford. Shop around for the loan, check your bank, other banks, credit unions, your job, family, and the dealership before you commit to anything.
Shop Mid-month, Buy End-month
It is always a good idea to wait until the end of the month or the end of the model year to purchase your new car, but do your shopping earlier. At the end of the month salespeople are eager to unload cars to make their quotas, and you may get pushed to purchase more than you intended. The same holds true for the end of the model year.
On the other hand, if you do your research early in the month you have plenty of time to comparison shop, take test rides and go online to find out just what the car you are considering is worth. Some consumer groups will provide you, for a fee, a complete list of just how much each feature costs the dealership. Start negotiating from that price, not the MSRP.
Consider Used Cars
Most cars depreciate 30-40% the first two years a car is off the lot. Barring unusual driving conditions, a car that is two years old is usually in great shape. Today, many car companies will allow you to carry over the warranties that came with the car for a nominal fee, if you really want to do so. In general, extended warranties are a waste of money, so don’t spend extra for them.
Also consider buying used cars from the dealership, as many have started offering their certified pre-own program. These cars also come with its own multi-year warranties as if it were purchased brand new.
Write Everything Down and Use the Competition
When you go to negotiate for a car, take along a pad and be prepared to write down everything the salesperson offers. Aside from the advantage of rattling the inexperienced, this will ensure that everyone stays honest with you. If you get to the point of negotiating a number, get a good faith contract written with a 24-hour guarantee. Take that contract to another dealership or two and try to get a better price.
Remember that a car is one of the biggest purchases you are going to make. Investigate the company you will be using with the local Better Business Bureau. Also, ask your friends where they got their cars and if the experience was a good one. In the end, figure out how much you are willing to spend and walk away if the deal isn’t the one you want.
This is another post that is aimed to save you at least a few bucks in the How to Save Money on Everything ebook. Find out how you can sign up to the free newsletter to get the free ebook here.