How to Save Money Buying a Car

by Guest Contributor · 13 comments

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.

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  • Arminius Aurelius says:

    Would normally trade in my car at about 90,000 miles . Have been buying Lincoln Town cars since 1975 . [ need a large car , am 6 ft. 6 inch tall ] When it is time to buy a new car , I always buy a ” new used ” car somewhere between 15,000 to max 20,000 miles . The last Lincoln I bought was a 2008 Lincoln in April 2008. It had 13,900 miles on it , like new. Normally a new Lincoln would cost about
    $ 44,000.00 or so . Bought this one from Off Lease Auto in Florida , it cost me
    $ 22,900.00 . Saved about $ 20,000.00 and the car was barely broken in. Can you imagine how much money you can save in a lifetime after buying about 8 to 10 cars ?

  • Marissa says:

    I am a fan of slightly used cars, meaning I buy cars that are 1 year or two older. Most of these have the warranties still on them and since they are normally import the resale value is still quite high.

  • Paul says:

    Hello sympathetic people. I urgently need financial assistance to carry out a complex operation to my sister ($ 8000) Please help with any amount. My moneybookers account is Thanks, Paul

    • Arminius Aurelius says:

      God helps those who help themselves . Get an education , learn a trade , work HARD and learn to SAVE money and invest cautiously . A fool and his money are soon parted.

  • Gerad says:

    This is something I’ve been looking into since I have a 10 year old car. I am determined to get the best deal. If I wait until toward the end of this year I could probably get a ’10 model with zero percent financing (like they are offering this year)
    I think that would be a better deal than buying one used and 1. not being completely sure it hasn’t been ragged out; and 2. actually having to pay a financing rate.
    I don’t see the major depreciation that I read about when I look at used models, at least not what I’m looking at (Infinity G37), they are selling ’08 with 10-20k miles for basically MSRP
    Any thoughts??

  • KateMTP says:

    Just be careful if you buy a used car and make sure to get an extended warranty. I bought a used car that I love, but it has been nothing but trouble. I took all the precautions, took it to my mechanic, etc. The car was in great shape and my mechanic said he had never seen an engine so clean. Then I started having some issues – googled the problem online and it seems to be a theme with my make, model and year. Make sure to research before you buy.

  • Cd Phi says:

    I totally agree with Squawkfox. There is nothing wrong with a used car and I’ve had pretty good luck with them so far. The art of buying a car is all about researching and then negotiating. Great tips here.

  • Squawkfox says:

    I’m a huge fan of buying used. Who wants to pay thousands in depreciation just by driving off the lot? Not I. 🙂

    • David A says:

      Ah, Squawkfox. You are repeating something Mom and Dad have been telling you since you were a kit. Call it “conventional thinking.” The truth is, your depreciation depends on which car you buy and its projected resale value.

      You want a Ford? Yes, expect to lose over $4,000 if you keep it a year or less.

      An Accord, BMW, or Scion? Figure on a resale price of about $1,200 less after a year. Now, $100 a month is pretty cheap for driving a brand-new car under full warranty.

      Financing is another issue, but a smart girl like you will be driving a used car until she can afford cash for a new model—right?

  • TheMoneyMan-Leo says:

    Yes, good advice. And something to keep in mind as they are trying to get you to buy the extras…”if you can buy it off the dealers lot, you can buy it cheaper somewhere else.”

    Those items include rustproofing, undercoating, wheel striping, car stereos, car mats etc.

    I showed up the last time I bought a car with a CD of driving tunes…only to find out there was no CD player….in a 2002 car…this was 2005. $600 from the dealer? Uh…no thanks.

  • John DeFlumeri Jr says:

    That is good advice, and I know, having just retired from 25 years in automobile sales and management.

    John DeFlumeri Jr

  • Benson says:

    I’ve been liking this series. Thanks and I look forward to more with the newsletter.

    One question, will I be getting the ebook right away?

    • MoneyNing says:

      Once you subscribe, you’ll be taken to a page that has the download link for whole ebook. Remember to also look out for email announcements of updates to the ebook, which happens regularly.

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