Whether you’re thinking about buying new or used, a car is one of the biggest purchases you’ll ever make. If the mere thought of visiting a car dealership fills you with anxiety and makes you instinctively clutch your wallet, read the tips below before you purchase your next vehicle.
Money Saving Tips for Buying a Car
1. Do Your Homework
Before you even step foot in a car dealership, take the time to research the vehicles that interest you. Visit sites like Consumer Reports or Kelley Blue Book to compare prices, read reviews, and find the best value for your money. Look for video reviews on YouTube (by dealerships or consumers) that evaluate vehicle features and show test drives. You may discover a model that you didn’t know about or find that a used car is the best fit for you.
2. Check with Your Insurance Company
When calculating the cost of owning a car, include the insurance policy you need to buy in order to protect you and your vehicle. No matter who your provider is, your insurance premium will change depending on the type of vehicle that you buy. Once you’ve narrowed down your choices, call your insurance company and get quote for each model that you’re considering.
3. Research the Dealerships
Do background checks on the dealerships in your area in order to find out more information about who you’re buying from. Look at Better Business Bureau ratings and online customer reviews to get a feel for the quality of service and other car buyers’ experiences. Also look at which dealerships are offering special deals, sales packages, or great financing opportunities.
4. Buy at the End of the Month
After you’ve researched, looked at multiple dealerships, and taken test drives, wait until the end of the month to buy. Car salesmen and women work on commission and often get bonuses for the amount of vehicles they sell in a month. So, they may be more willing to agree to your terms if you come in during the last days of the sale cycle. This is especially true in December and January, when dealerships generally sell the least amount of vehicles.
5. Pay Cash
A vehicle’s value depreciates as soon as it’s driven off the lot, so why pay more in added monthly interest for a loan? If you can afford it, paying cash up front saves you money over time, and gives you more power to negotiate at the dealership. Dealers are more likely to work harder to get you in the car that you want if they know that you are ready to pay in full.
6. Shop Around for Financing
If you don’t have enough cash to pay for your entire car purchase, save up for a substantial down payment (ideally 20% or more), and choose your financer carefully. Car dealerships make money through their financing department, so their deals are usually not the lowest. Get your credit score, and check with your bank and your local credit unions to see who offers the plan that fits your needs.
7. Avoid Extended Warranties
When a salesperson offers you an extended warranty, he is typically asking you to purchase a service contract through his dealership–not a contract with the car manufacturer. This is yet another way that dealerships make money, especially since car owners rarely take advantage of this service. If you are buying a used car or know you will own the car for a long period of time, take time to understand the car’s original factory warranty. Then look at extended warranties offered by independent companies and compare them to the one offered by the dealership.
The more prepared you are before you walk into the dealership, the more confident you’ll be when it comes to buying the car of your dreams (and getting it for the price you want). Give yourself some time to close the deal, and be willing to walk away from the table if the salesperson is pressuring you into paying a price that makes you uncomfortable.
written by: Stephanie Marbukh
Stephanie Marbukh is a freelance blogger who writes about a variety of topics including money-saving tips and home maintenance.
Photo Credit (top picture): Local Manhattan Beach