Purchasing a new or used vehicle usually involves a lot of time, stress and money. Although people have to face this task an average of about every 11 1/2 years when buying a new car, there are secrets to purchasing a car that can make the process a whole lot faster, easier and cheaper.
Click through to discover the biggest things you should do and not do when buying a car.
1. Conduct Research Ahead of Time
Nearly 90% of car buyers use the internet to research autos before making a purchase, according to Autotrader. Sites such as Kelley Blue Book, Autotrader.com and Edmunds are equipped to provide shoppers with information that is crucial to the car-buying process, such as available rebates.
2. Pay With Cash
If you want to get a great deal on a used car, cash is king, said Doug Nordman, author of “The Military Guide to Financial Independence and Retirement.”
“If you’re bottom-fishing at prices under $6,000, you can negotiate a huge discount from a private seller by paying cash,” he said. “Our daughter saved $500 off a $4,700 purchase, and over four years later that vehicle is still going strong.”
It might be tough to fork over a big chunk of change but paying cash for a new or used car will also keep you from wasting money on interest payments and give you more equity in your car.
3. Leverage Banking Rewards Programs
Your bank may offer a rewards program that isn’t necessarily limited to cash back, air miles or points — sometimes those loyalty programs can get you great deals on financing, too, said John Schleck, senior vice president and online sales executive at Bank of America.
“While it is not a ‘secret,’ prospective car buyers may be pleasantly surprised to learn they can potentially enjoy a discount on their auto loan interest rate through the relationship they have with their bank or current lender,” he said.
4. Don’t Pay More Than $500 Over Invoice
You can offer a car dealer anywhere from $100 to $500 over a new car invoice price and still walk away with a great deal, according to InsiderCarSecrets, a consumer advice website for car buyers. The site recommended offering $100 over invoice price on lower-priced vehicles, or $500 on a more expensive model.
Note that the invoice price is the dealer cost, according to automotive resource Edmunds, and is different from the manufacturer’s suggested retail price, or the sticker price. You can find out the invoice price on your preferred car ahead of time using NADA Guides.
5. Shop the Manufacturer’s Website
If you’re in the market for a new car, this car-buying tip could save you money and hours. One way to get multiple quotes from dealers is to go directly to the car manufacturer’s website, choose the car you want — including model, color and features — and request quotes from dealers in your area.
Since dealerships compete with one another, you likely will get the best price they offer without going through a painful negotiation process. Collect as many quotes as possible before heading to a dealership, and don’t be afraid to let them know what other dealers offered. If they can’t beat the sticker price, see if you can get any other freebies like an extended warranty, free all-weather mats or coupons for detailing.
6. Give Them One More Chance To Accept Your Offer
If you make an offer, and the salesperson comes back from the manager with anything other than a “yes,” you should get up and start to leave, InsiderCarSecrets recommended. If the salesperson tries to get you to stay, the site said you should only give them one more chance to make a deal.
7. Get Your Own Financing
If paying cash for a new or used car isn’t an option, then skip the dealership financing and shop around for your own car loan. That way, you can take your time to find the best rate — not just what the dealer offers — and you can be clearer about the terms and cost of your financing.
Also, take some time to understand what your car loan interest rates will be like so you can be ready for the expense.
8. Beware Of the Add-Ons
Once you make a deal on the price of your car, you could receive an invoice that tacks on charges for several extras — such as an extended service warranty, security system, paint protection or rust coating. These items are very profitable for the car dealership but probably won’t add any extra value to your car. If you are interested in one of the offers, just know the prices are negotiable. If you’re not interested, you have the right to tell the dealer you’d like to purchase the car without add-ons.
9. Get an 'Out the Door' Price
Sometimes a dealer will offer you a low quote, only to add additional charges later that bump up the sales price. Always let the dealer know you want an “out the door” price, which includes all the taxes and fees associated with the purchase of a new car. That way you won’t waste time settling on a number, only to be surprised by a much higher price later, according to Edmunds.
10. Keep Your Trade-In a Secret
If your car salesperson asks whether you’re trading in your old vehicle, simply tell him or her you aren’t planning on it. This might not be entirely accurate, but keeping the trade-in value of your car out of the negotiation can help you get a better deal on your car. Once you have a firm price set on your car purchase, you can ask about trading in your car, said InsiderCarSecrets.
You will probably get offered less than the wholesale value of your car, but this forces the salesperson to take the trade-in value right off the top of your set purchase price. This way, the dealership can’t use your trade-in value as a negotiation tool or manipulate the numbers and make you feel like you got a better deal on your new car, according to InsiderCarSecrets.
11. Have a Good Attitude
You’ll catch a lot more flies with honey than vinegar — especially during the car-buying process. Buying a new car can be stressful and unpleasant, but maintaining a good attitude and keeping calm can make the experience easier. It might be the salesperson’s job to be nice to you, but they’ll be more willing to help you get a great deal if you treat them well in return, according to InsiderCarSecrets.
12. Shop For Less-Popular Models
Dealerships usually buy cars directly from the manufacturer. In this deal, there is typically a “holdback,” which can be as much as 3% of the MSRP or factory invoice price, reports AutoCheatSheet. Once the dealership sells the car, it receives that money, or holdback, back from the manufacturer. If you are shopping for a new car, it might benefit you to look at less popular models, so you can take advantage of the holdback and offer a price that’s lower than the invoice.
However, if you are shopping for a popular model, the dealership might be less likely to bite. It’s the simple rule of supply and demand: If demand is high for the car you want, you’re less likely to negotiate the holdback price. If demand is low, the dealership will be more open to negotiating.
13. Research the Extended Warranty
New cars come with a variety of warranty options, which the sales manager presents to you once you settle on a sales price. These extended warranties claim to offer extra protection should anything go wrong with your car, but according to Consumer Reports, the fine print might keep you from actually being able to use it. They are also highly profitable for the dealership — stores usually keep 50% or more of what they charge the customer.
Carefully read the fine print on the extended warranty to be sure you understand the coverage before purchasing it, Consumer Reports suggested. You might also already be covered on certain items through your homeowners and auto insurance — and you don’t want to get caught paying hidden, unnecessary costs.
14. Email a Salesperson Directly
A single email can help you get the best deal on a new car, according to MoneyUnder30. Collect at least one salesperson’s email address from each of the dealerships you’re considering. You want the salespeople to know who they are competing with, so make each email address visible in the CC line.
In the email be sure to state that you’ve selected the car you want, and you’d like to buy it by a certain date. Then list the options you need, and that you’re aware of the costs associated with them. Include any special deals or rebates offered by other dealerships. Next, state that you’re preapproved for financing but are willing to finance through the dealership. Finally, give the salespeople 24 hours to respond with their best offer and hit send. You might not hear from everyone on your email list, but you should get some competitive quotes.
15. Know Your Credit Score
If you need to finance your car purchase, your credit score and history will majorly impact your monthly payments. Before you start shopping for a car, pull your credit reports and credit scores from the three major credit bureaus: Equifax, Experian and TransUnion.
RealCarTips points out that dealerships act as middlemen and when they make you a loan offer, they mark up the rate you qualify for so that they will profit from the transaction. Knowing your credit score will give you an idea as to what type of rate you should be getting, so you can spot inflated quotes.
16. Buy a Year-End Holdover
Toward the end of the year, dealerships need to make room for the next year’s models. Edmunds reports that customers will find December has the highest discount off MSRP, as well as the highest incentives when compared to the rest of the months. If you can wait until the end of the year to buy, it could be worth it.
17. Rent Before You Buy
Test driving a car at a dealership is fun, but you’re not going to get a truly accurate feel for what owning the car is like. A car is one of the biggest purchases you will make, so it’s important to make sure the purchase is going to work for you.
Renting the same model of car before you buy is a great way to give ownership a test run, according to Edmunds. Give yourself a week to drive the car and really see how it meets your needs. If it’s a match, then you can feel good about your decision to buy.
18. Shop at Larger Dealerships
In March 2015, Popular Mechanics interviewed an anonymous car salesman who gave away some of his best car-buying secrets. Shopping at a larger, popular dealership will help you get a better price on a car, according to this expert.
“The larger dealers move a ton of inventory each month, so they can afford to sell a few cars at ‘Back of Book’ or $100 to $200 under invoice,” he said.
19. Don’t Fall For the Waiting Game
Aaron Miller with Thrillist points out two waiting-game tricks dealers often play. First, he says the dealer acts busy to create a position of dominance by making you feel that his time is more valuable. Second, waiting and spending a long time on the lot will result in you feeling tired and overwhelmed. When you get in that state of mind, you’re more likely to settle instead of continuing to negotiate the best car deals.
20. Don’t Fall For No-Haggle Pricing
No-haggle pricing sounds like a dream, and it is — for the dealership. Road and Track said that this gimmick is most likely a worse deal for you. If you’re financing through the dealership, you’re likely going to have to haggle for that anyway, so you might as well prepare yourself to negotiate on price, too, to ensure you get the best deal.
21. Negotiate in a Neutral Location
Reader’s Digest points out that car dealers are taught during training that they should negotiate at their desks. Psychologically, buyers will view the dealer behind the desk as being in control, which may lead them to pay more than they really want to. Instead, consider doing your negotiations in a neutral location, such as outside, alongside the car you’re interested in.
22. Negotiate Like a Pro
When it comes to negotiating, don’t lose sight of what you want to pay. Armed with your research, you’ll know a fair price, and don’t let salespeople intimidate or pressure you into paying more. Even if you love the car, let the dealer know you are ready to walk away.
23. Give the Car One Final Inspection Before You Drive Off
If you haven’t done this already, give your car a careful once over. If you notice any scratches, dings or any other issues, request to schedule time with the dealer to get them repaired at no cost, according to RealCarTips. You can even do this after you’ve signed the contract and received the keys — just be sure to do this before you drive off the lot.
More on Money
- How To Save Money on All Your Monthly Expenses and Bills
- 9 Best Budgeting Tools
- 20 Ways To Increase Your Savings and Retire With Peace of Mind
- Best Rewards Credit Cards of 2019