It never ceases to amaze me.
Someone I know will go out to a local car dealership and drop a gigantic load of cash (more often… ‘credit’) on a brand spanking new car. They will start telling friends about how much their monthly payment is.
It’s truly mind-blowing. And then more often than not these same people can’t even pay their monthly bills just a few months later.
So if you are the kind of person that just has to “keep up with the Joneses” I’ve got some good news:
Today, I want to give you some tips for buying a new car so that you can save money on your next car purchase.
USA Today did a story about the average new car price and found it is roughly $37,000, with the monthly payment being $550 to $600 dollars.
I’m not trying to rain on your parade, right! But don’t you want to be more mindful of the amount of moolah you are shelling out, or worse yet, the mountain of debt you are building?
Being a bit more knowledgeable going into the car buying process really has served me well. I have bought many used and even some new cars in my day.
In today’s I’m giving the best tips for buying a new car so that you can save $2000 or more!
Can you say “Gimme back my green!” Sure you can!.
Okay, so let’s get this post going! Here are ways. you can save $2000 or more on a new(er) car purchase.
1. Get Top Dollar For Your Trade-In Vehicle.
To make a profit on your used car, car dealerships will offer you less money than they can sell it for. Obviously this is how they maximize their profit. If they were giving everyone more than what they could sell it for, well they would possibly go out of business.
Don’t let them just steal your car for next to nothing.
Make sure to check out the KELLY BLUE BOOK PRICE of your vehicle’s make, model, engine size, miles driven, year and as many other details you need – which will then give you the going price for your vehilce. If you find out your vehicle’s “Blue Book” value is $5000, you can use that knowledge to your advantage.
Remember, knowledge is power, but only if you know how and when to apply it. Be savvy, be just a little bit greedy. The car salesman/woman is trained to be greedy for the company.
Look, the world goes round with win/win compromises.
Make sure you get at least $3,500 or $4000 for a vehicle that has a $5000 Blue Book Price. See – now your saving $1000 or more already and we’re still on #1!
2. It’s All About The Financing.
Ha ha. This is truer and truer as time moves along. You may not be the sharpest pencil in the room when it comes to how financing works. Have no fear. It’s really not rocket science. I would go out and buy a book on financing and interest rates and get some idea of what you can truly afford to buy and what is the maximum term of years, and interest that you are willing to agree to.
If it looks like you have a long term beyond 60 months or 72 months maximum, or you are way over 10% or more on your interest rate, then maybe this car is just a little bit over your budget.
!r maybe they would Of course this is normal, but you want to be mindful of this so that you can get the most money out of your trade-in vehicle. Even though it takes a little more work, you can often make more money if you sell your car privately instead of selling it to a dealership.
3. Try To Research Your Own Car Financing.
Are the financing people at the car dealership trying to rip you off? Not usually. They often have their own interest rates and sometimes these rates are okay, and sometimes not. At the end of the day, do your best to keep them honest and make sure you are taking the time to get the best financing you can get on this car. It’s likely your second most expensive monthly payment after your mortgage.
If the car dealership insists that they will only agree to finance your vehicle if you stay “in house” then just say, “I will agree to use your financing if you can agree to match my best outside financing offer as close as possible.” They will get much closer anyway.
4. Negotiate The Car Deal
Just know this: negotiating a win/win deal is actually a fine art. It takes some of the best negotiators years to master. You are not going to be able to walk in there and “name your price.” In fact, they may use all sorts of harmless but persuasive tactics to get you to agree to a price that they want. So know that the lowest they can go is almost always never the limit.
Let’s say you wan’t to buy a vehicle that has a retail price of $41,000. You have to assume that there is a $3000 or $4000 cushion in there. So lets just say, then, that you decide the actual highest price you are willing to settle for is $37,000. Then make $37K your final line in the sand; not $41K.
The negotiating price then will start when the sales person offers you an amazing 2000 off – at the insanely low price of $39,000. You then should counter with something a bit lower than you actually want to land on – like maybe $35,000. Yes, of course this will not. be acceptable to them. They may laugh, or. even snicker at you.
Don’t worry. This is very normal. Inside they are thinking, “Boy. This person is tough.”
So they may leave to “talk to the Sales Manager. They will come back and the Sales Manager says “We decided to make you an incredible deal. Take it or leave it at $38,000.”
At that point, you could test them and say “Well if you did it for $36,000 I would make the deal right now.” That might work. It depends. Some places do not appreciate too much back and forth. You could risk losing any deal. If you feel they mean what they say and they are getting ready to remove the offer, then rejoice that you got $3000 off on this car!
5. Visit Another Car Dealership
I almost always visit more than one place when I am car shopping. And then, I let them know I have talked with “the other dealership” down the street. This is just to keep them on their toes, AND – to get a little FOMO (Fear Of Missing Out) going in their psychology. This can only help you in getting the best bang for. your bucks!
They may price match the other offer. But moreover, they usually appreciate that you didn’t “go with the competition” without giving them a chance to play ball.
6. Buy A Slightly Used Car
There is obviously a give and take here. If you choose a car that has 1 year of warranties used up, and 20,000 miles or more… yes that car’s worth has dropped considerably even though it’s 1 year off the lot.
KELLYS BLUE BOOK again will tell you what this car’s valued price is now. If you don’t mind these losses, you can easily see $2000 and all the way up to $6000 reduction in sales price with a $41,000 vehicle that has 1 full year of use on it.
BE WARNED: Today’s vehicles are not easily maintained or repaired outside of the dealer, or professional auto mechanic doing the maintenance or repairs. Technology has unfortunately brought the sophistication of car repair to the point where only dealers likely have the advanced tools, systems, digital computer analysis capabilities to keep your vehicle in tip top shape.
In light of this, you might just decide to buy the car brand new; thus retaining all warranties and value of the car.
- Incentives and bonuses from the car manufacturer. This means that if you can buy a car when a dealership hasn’t reached their selling quota, you may be able to get a great deal on your car purchase (this is covered more in my list of tips for buying a new car). Many times car dealerships will take a loss on the vehicle if it means that they will be able to reach their quota.
- Financing the vehicle. Dealerships make money when you finance vehicles through them.
- Extra options. These are things like an extended warranty and upgrades.
Buying a new or used car can be fun and stressful at the same time. You don’t want to get tricked or duped, so here are tricks and tips for buying a new car before you start shopping!
Here are my best tips for buying a new car (or used one):
Think about the WHOLE COST of the car.
The most important of these tips for buying a new car that I can offer you is that you should think about more than just the monthly payment.
You should only purchase what you can actually afford. Just because the monthly car payment looks affordable, it doesn’t mean that it actually is.
There are car payment terms that are as long as 96 months, which is just crazy to me. A car salesperson may stretch out the car payment so that it looks to be more affordable for you, but you should be aware of the whole cost, which includes things like interest and taxes.
Please, please, please, look at the whole cost and see if that’s actually an affordable amount for you to be paying every month.
Even if you aren’t buying a brand new car, used cars can still cost you more than you think in insurance and taxes, so always think about the total cost before you purchase your next vehicle.
Shop around for your own car financing.
If you have to finance your car purchase, make sure you shop around before you agree to the dealer’s interest rate. Sometimes the first dealer you visit will have the lowest rate, but sometimes they won’t.
You may be able to save yourself hundreds (or even thousands) of dollars a year by simply shopping around. Plus, it’s extremely easy to shop around for the best interest rates – start with local credit unions and banks!
I’m in quite a few Facebook groups about personal finance, and this topic comes up over and over again: people who are excited about getting a car loan with an interest rate of over 20%. And sadly, many of these people are buying brand new cars, not realizing how much they are about to pay because they don’t know much about personal finance.
20% is not a good interest rate for a car loan – so please don’t be excited about that! I am saying this to help you, not to be mean in any way.
You should shop around and make sure you are getting the best possible rate. If you are getting a 20% interest rate on a car loan, then you should probably not be buying a brand new car. There are plenty of more affordable vehicles that are older but still quite reliable.
Visit more than one car dealership.
You can shop around car dealerships both online and offline.
I recommend shopping online before you go to a dealership, this way you can be prepared in advance with the costs, loan terms, extras, and more. While shopping around does take time, you won’t be wasting it on a dealership that can’t get down to the price you want.
Skip the extras at the end.
When you are about to purchase a car, you will be encouraged to buy many small options that you may not need. This may include extras such as:
- Paint protection
- Extended warranties
While you may believe that you need some of those options, you should make sure that you’re not just thinking about the monthly cost. The financing manager will offer you these extras in a way that makes it seem affordable. But, these extras only appear inexpensive because they are padded into your monthly cost, so don’t be fooled by how “affordable” they seem.
Yeah, $10 or $50 each month may not seem like much, but it can add up to a lot over a 5 year period!
Trust me, you are paying for these. Dealerships make money on these extras.
Related: 30+ Ways To Save Money Each Month
Figure out how much your trade-in is worth.
One of the best tips for buying a new car if you’ll be trading in your vehicle is to know how much it is worth before you step foot into a car dealership.
Kelley Blue Book is a great resource for researching what you’re old car is worth. While you may not get the exact amount that Kelley Blue Book claims you will get, it can be a good estimator or starting point when negotiating with the car dealership.
Know when to shop.
There are certain times of the month and year that are better for car shopping than others. If a dealership is trying to meet their sales quota, they are more likely to give you a deal than when they’ve already beat their quota or if it’s the beginning of their quota.
This is because car manufacturers will give bonuses and extra incentives to car dealerships who sell a certain amount of vehicles. This gives car dealerships extra motivation to give really good deals if they are close to their quota.
This is one of the best tips for buying a new car that my husband learned from selling cars.
To know the best time to shop for a new car, you may want to make friends with a car salesperson, find out when their end of month or end of quarter is, and so on. Or, you could just ask someone at the car dealership.
Don’t be afraid to negotiate.
Even if you get a discount, such as a car manufacturer discount, you should still negotiate. Many times, those friends and family discounts mean that you are not able to haggle at all, which can lead to you actually paying a higher price.
Cars sales are usually meant to be negotiated, whether it is a brand new vehicle or a used one. If you don’t haggle, you will most likely lose out on a lot of money.
Other aspects of the vehicle buying process can be negotiated on as well, this includes your trade-in vehicle, warranties, interest rates, add-ons, and more.
Learn more about negotiating at How To Rock At Negotiating On Everything.
No matter what, you should be a decent human being. This is one of my tips for buying a new car that applies to most other aspects in your life.
Being rude doesn’t get you anywhere. It won’t get you the best deal, and it may actually make the salesperson and the dealership not want to help you.
After you purchase a car you are asked to go through the car manufacturer to grade your car salesperson. If the salesperson knows that you might give them a bad grade (for no reason at all), they may not want your deal because it’s not worthwhile to them to have a bad score, which decreases their salary/income.
Plus, you should always be nice anyways. Salespeople are just doing their job and trying to make a living, and the majority of them are good people. If you’re nice to them, they may be willing to help you out a little more.
Miscellaneous tricks and tips for buying a new car.
Here are several other tips for buying a new car (or used one):
- Never shop when you’re hungry or tired. You should always be well-rested and ready for an eventful day.
- For the car dealership to beat their quota, sometimes they will buy a new car themselves and put it on the “used” car dealership side. The car is still brand new, but is now considered pre-owned. This can allow you to save a good deal of money. However, you do want to be mindful of the warranty, because the warranty has most likely started once the car was officially bought the first time, even if it was bought by the car dealership.
- Purchase a car at the end of the car’s model year. Dealerships want to move out last year’s model to make room for the new ones, which can lead to a good discount.
- Look into car insurance before you purchase. You should contact your car insurance agent so that you are not surprised by a high insurance rate after you make a purchase.
- Figure out what you’ll need to pay in personal property taxes for your car, which varies state to state. You will need to add this into the total cost of your car.
- Don’t tell the salesperson what your budget is for a monthly payment. You should always negotiate on price first. A dealership will try to get you into something that will just barely fit your monthly payment budget, which can cause you to spend a lot more money in the long run.
- Be confident. When negotiating, you should always be confident in what you are saying, and do not be afraid to walk away. If it’s not meant to be, then it’s just not.
What other tips for buying a new car can you share? Leave them in the comments below!