How to Get the Best Car Deal
Are you looking for a great deal on a car? Car buying can be a daunting process, even with the aid of tools like dealer websites, online auto trading, and the Kelley blue book becoming digital. As you look around to see each dealership offering you will find a wide variety of car pricing, with the sales manager often employing flashy sales techniques. A sales manager can use these sales techniques to get you into a test drive, and entice you into a financing offer or car loan with a long loan term, monthly payment and high interest rates. This can lead to a door price (total cost) far higher than the sticker price, which is already inflated from the invoice price. So how do you make sure you walk away with a good deal (and maybe even an extended warranty?). Here are some tips to make sure you get a great deal and keep your total cost down when car buying.
1. Don’t use credit, limit yourself to what you can pay with cash. You might need to downgrade your purchase aspirations, but if you enter a financing offer or get a car loan you will be paying a much higher door price. For example, a $10,000 dollar vehicle financed at 5% APR for four years would result in $11,000 total paid: You’re paying 10% extra just for the cost of borrowing money! And never, ever, use a credit card to make such a large payment!
2. If you are using credit, get pre-approved by a bank or car loan company before approaching the dealership. You will almost always be able to get better interest rates and auto loan terms from these institutions than the dealership offering. If you are able to talk to the sales manager with your car loan term and monthly payment pre-approved, you can spend more energy negotiating a great deal like extended warranty. It needs to be said again, for young first time buyers: NEVER USE YOUR CREDIT CARD! The rates on a missed payment could sink you!
3. Research the vehicles you want to see before walking into the dealer. Really do your homework! A good sales manager can take the uninformed customer for a ride (pun not intended) towards car pricing far above your capacity, but if you have already secured financing and narrowed down which vehicles you are interested in then you can easily compare sticker price to find a great deal. Tools like Kelly Blue Book and TrueCar are most useful once you already have a few models in mind to compare.
4. Additionally, your research should tell you the true cost of owning the vehicle. There are all sorts of hidden costs which depend on the vehicle: Depreciation, the gas cost, maintenance, and the differing insurance rates for each vehicle can make a big difference in the lifetime price of the total cost of the vehicle over its lifetime. If you read about common issues with the vehicle, you can look for them during the test drive and bring them up to the sales manager, and you will know whether you are purchasing a vehicle which really requires an extended warranty.
5. The timing is important, and so is the age of the vehicle. Look at the dealership offering of older vehicles: A sales manager hates to have old inventory sitting on the lot, you can get a great deal from finding these vehicles and pitching an officer close to the invoice price. The time of the year will also play a major factor here: the end of year sales are usually the best times to find a good deal as sales managers attempt to unload last years car models. You can even benefit from the sales manager having to meet their monthly quota by coming back at the end of the the month for a discount on the sticker price!
6. Membership warehouse stores like Costco or Sam’s club sell new cars! These large membership commercial giants have already negotiated a good dealership offering, so going through them you can find a great deal with no need to negotiate with the sales manager yourself.
7. Avoid adding options and higher trim levels. These increased option levels do not hold their value during resale, their expensive addition will depreciate more rapidly than the invoice price of your car. Also avoid the dealership offering options like undercoating, custom paint, or fabric protection: The price quotes for these minor additions will be far higher at the dealership than you can find elsewhere after purchase.
One major option to avoid shelling out money on is a larger wheel size. It will cost you a lot more to make the initial purchase, and you will be paying for that increased door price in your monthly payment. Large rims will also increase the lifetime cost of your vehicle, with heavier tires and rims increasing your fuel consumption as well as larger tires being far more expensive to replace. Your extended warranty will likely not even cover tires and rims, so look closely to see if it’s worth i!
8. Learn to drive manual transmission / stick vehicles. So few people know how to drive stick that the demand for these vehicles is almost always higher than their supply. You can get a great deal with this skill! These stick shift vehicles typically have a lower invoice price right out of the gate, and over the lifetime of your vehicle you can save money on gas, as well as brake and transmission repair costs.
9. You can buy below invoice price! Most people think that you always have to pay a sticker price higher than the invoice price so that the dealer can make a profit, but in many cases the manufacture negotiates with the dealership offering incentives for moving certain vehicles. The sales manager knows their incentives, so get them under the invoice price if at all possible! It will translate to a lower door price and reflect in your car loan term.
10. Use your access to technology to snoop out a great deal. If you reach out to the dealership by email you can possibly get a price from their internet department which undercuts what the sales manager at the dealership has access to. Using email negotiation, you can be in simultaneous car pricing negotiations to find the best dealership offering or online offering. Once you find the lowest price through email, you can book the test drive for further in person negotiation. You should also keep your smartphone out while negotiating – you can refer to Kelley Blue Book, Edmund’s, and other online resources to verify what the sales manager is telling you. If you get a string of false or misleading statements, you know to leave!
11. You negotiating attitude can make a big difference in the door price you walk out with. You should be nice to the sales person or sales manager, and tell them that you are planning to buy as soon as possible so that they have ever incentive to give you the best deal. If you are bringing a trade-in, treat it like a separate deal and not as part of the negotiating process for the new vehicle to make sure that you get a good value for it.
You should also negotiate to pay less (or nothing) for options on the used vehicle, if you can convince the dealer that you didn’t want them in the first place. If a vehicle with a sunroof wasn’t on your list of priorities, you should think twice before accepting that you will pay extra just because the sunroof model is the only one on the lot! With your interests in mind, you can also ask the dealer to throw in cost saving extras to sweeten the deal: Floor mats, key fobs, free oil changes are all on the table. If the negotiation isn’t to your liking, be willing to actually walk away – you may get a dealership offering more in your favor when they decide in retrospect to salvage the sale.
Lastly and perhaps most importantly, as you wrap up the deal make sure you read the paperwork before signing anything! The verbal agreement with the sales manager isn’t enough, especially when it comes to numbers. Your door price could be significantly altered with even a small variation in interest rates. Don’t let a good deal be spoiled at the last step because you didn’t take the time to read over the paperwork!