Other than buying a home, a vehicle purchase can be one of your biggest financial decisions. Choosing the right car for your needs and getting the best price can be an intimidating process.
Prepare yourself with the following tips to help you get the best price on your next car purchase.
1. Do your homework
With a little online research, you can evaluate different makes and models and get quotes from multiple dealerships without leaving your house. Sites like Cars.com, TrueCar.com and Edmunds.com have tools that allow you to compare pre-negotiated prices on the exact vehicle you want.
2. Shop at the right time
The busiest times at most car dealerships are on weekends. Dealerships typically have monthly, quarterly and annual sales goals. Look for deals during these events when salespeople are trying to meet these goals. You might find additional savings at the end of the month, quarter or year.1
3. Know the value of your trade-in
If you’re trading in a car, decide the amount you’re willing to accept before you go to the dealership.1 Research your old car’s value online – Kelley Blue Book is a good resource for this information to help you get a fair price.2
If you don’t know the value of your trade-in, the dealer may try to offer you less than its actual market value to earn a higher profit. For example, if the dealer lowballs the value of your trade-in by $1,000, they can lower the price of the new vehicle by $700 – making it seem like you got a good deal while making a $300 profit.1 Dealers try to buy at low wholesale and sell at the top retail price.
If you want to get a little more bang for your buck, instead of trading in to a dealer, consider selling your used vehicle on your own.1 You can then put the cash toward the purchase of your new car.
4. Get an auto loan from your bank, not the dealer
Dealer loans often have higher interest rates and may contain extra charges, or markups, that they may or may not tell you about to boost profits. If you plan on financing your new car, check with your bank or another financial institution first, like a credit union or online lender, to find the best rates.3 You can go with a loan from the bank or use the bank’s rate to help negotiate with the dealer.
5. Forgo the extended warranty on a new car
Many dealers may try to push you into purchasing an extended warranty on your car, but many new cars come with a factory-included, bumper-to-bumper warranty, typically for three years and 36,000 miles.4 Chances are this factory-included warranty will be all you need. When your standard coverage ends, you can purchase an extended warranty then.4
After negotiations begin, be prepared to walk away if you aren’t getting the deal you want.1 Don’t let a salesperson pressure you into buying at a price you’re not comfortable with paying. You may be able to find a better deal elsewhere.