My sister is in the market to buy a new car, so what that means is that I’ve spent every free moment looking at cars and figuring out the numbers with her. Purchasing a car is not a decision that should be taken lightly, especially since it’s the second largest purchase that most people will ever make in their lifetime. For example, considerable thought should be given to whether or not you’ll finance the vehicle through the dealer, pay cash in full, or look for a loan elsewhere. However, that doesn’t mean that you can’t still have fun looking for a new car! After all, isn’t saving money when buying a new car just as exciting? So, before you head out to seal the deal, make sure you take the following money saving tips to heart.
- Pay in cash. Although the deal may look less appealing because you have to pay a larger sum upfront, a cash transaction is usually the least painful way to purchase a new car. Not only will you save a lot of money in interest, but some dealerships also offer significant discounts to buyers who pay full in cash. You also won’t have to worry about your vehicle being repossessed if life happens and you can’t pay your monthly car bill, either.
- Shop around at multiple dealers. Like any other large purchase, buying a car shouldn’t be rushed. If you do that, then you’re more likely to drive away with sky high interest rates and a car that really doesn’t fit your lifestyle, anyway. Instead, take the time to visit at least three or four different dealerships to see what kind of financing terms, pricing and customer service they offer. Remember, the dealerships are competing with each other on price, so don’t be afraid to use that to your advantage.
- Do your research first. Along the same lines of shopping around, it’s also extremely important to do your research before blindly handing over money when buying a car. You should have a basic understanding of what make and model you want, the features, upgrades and also the safety rating, too. Oh, and don’t forget the average market price! The worst time to shopping for a vehicle is when you’re unprepared because it’s easier to be taken advantage of by a salesman that bombards you with a slew of fancy upgrades.
- Buy a used car. If you’re tight on cash, then buying a used car may be one of your best bets. Not only are most used cars easier to purchase outright with cash because the price is lower, but they’re also often just as good as their new counterparts – the only thing that they’re lacking is the new sticker. However, that being said, you should always have a used car inspected for mechanical soundness and performance before signing any papers. If you aren’t sure how much a used vehicle should run you, then take a minute to visit the Kelley Blue Book website. Once you’re there you can input the make, model, year and condition of the vehicle to receive an estimated value of what the car is worth.
- Negotiate the price. Car dealerships are not out to give you the best deal they can on a vehicle; they’re a business like any other and their sales team is trained to turn a profit. However, that does not mean that you can’t negotiate a lower price if you find a vehicle that you really want. In other words, very few things are set in stone at a dealership – you just have to be willing to ask for what you want.
- Trade in old vehicle. This works well when you’re buying both new and used, just try to refrain mentioning the trade in until you have negotiated a price on the new vehicle. By playing the game this way, you’re more likely to receive a lower price than you would if you had told the salesman about your trade in before negotiating.
- Pay attention to the overall cost. One of the biggest things to watch out for is a low monthly payment that’s part of an extended plan. The lower payments won’t save you any money after you factor in all of the interest that you will have accumulated by the time the car has been paid off.
- Wait until you find the right deal. The mindset that you start shopping with is important, and many people end up paying more for a vehicle because they visit dealerships with the expectation that they’re going to drive a car home that day. Unfortunately, that’s the best way to avoid saving money when buying a car. Instead, start shopping knowing full well that it could take weeks to find the lowest price and the best deal.
- Shop around for financing. Even though the dealership may try to push you into their in house financing program, take a step back and look around before signing any papers. One of the cheapest ways to finance a new car purchase is to obtain a loan from a credit union – the same cannot be said about most dealership financing.
- Read the financing terms in full. This ties into the above tip. While easier to get for some people, financing through the dealership can lead to headaches and frustration when there are “hidden” terms – like cash penalties for paying the loan balance off early. You should always avoid entering loans where you are penalized for early payments because you may end up paying more in interest for the car than the initial price.
On a final note, don’t allow yourself to get sucked into the up-sale. Some are a good idea, like service warranties, but others are completely unnecessary and will only serve to increase the final price – like tinted windows and heated mirrors. As long as you use at least one of the above ways to save money when buying a car, or better yet a combination, you’ll definitely walk away with a good deal and a price that you feel comfortable with.