Frugal Living

Tips To Get the Best Deal on a New Car

Tips To Get the Best Deal on a New Car

Photo Compliments of Jim

For most of us, buying a car represents the second most expensive purchase we’ll make in our lives, behind buying a home. If this is your mission, arm yourself with as much information as possible. I have a few tips to get the best deal on a new car below, the result of scars and bruises from years of experience.

Do Not Decide What You Want On the Car Lot

Base your choice on your need for fuel economy, capability, space, passenger capacity, and price range. Consider your desires for performance, looks, and amenities and of course reliability. Use your decisions to focus on a few vehicles and narrow the list by reading reviews and using guidance tools on the Internet (a few included immediately below). Once you have a short list, test drive or rent the vehicles. It is surprising how your choice changes after a month of firsthand experience. If you take your test drive at a dealership, don’t get caught up in the buying experience. Explain that you are only researching at this point. The test drive should narrow your choice down to one vehicle. Then you need to dig much deeper.

Tools…Tips To Get the Best Deal on a New Car

Guidance Tools…MSN Autos

What to Look For When You Test Drive – Check List

Be Sure to Watch-Dealing with the Dealer

Research Your Number One Choice

Once you’ve picked the vehicle you want, choose the trim level based on the features and options you can’t live without. Go to the website for the brand you are considering and navigate to the “build and price” area. Build the car to the specifications you want. This will give you the manufacturer’s suggested retail price, plus the destination charge. Visit third-party websites to find the vehicle’s invoice price. When the time comes to buy, don’t deviate from the trim level you chose.  The Dealers Invoice Price can also provide you with this information.

Get a Price Quote

Once you’ve chosen the model and options, email a few local dealers and ask for a quote on that exact vehicle. Add a timeline for your buying process, this demonstrates that you aren’t just a tire-kicker, you are a real buyer. You can also use Internet services for this step, such as the “get a quote” links on websites such as MSN Autos and pricing sites such as TrueCar.com. To get your business, one of those dealers might quote you a good price right up front.

Take Your Best Quote to Your Preferred Dealer

Take documented evidence of your best price quote to your preferred dealer and start negotiating. The dealer will be compelled to meet or beat your best price to earn your business. Use timing to your advantage. Buy when you want to and not when you are desperate. Visit the dealer at the end of the month when the staff is trying to meet sales goals.

Don’t Be Pulled Buy Emotion

Once you get to the dealer, don’t get caught up on the emotion of the car-buying experience. The buying process can be an emotional drain, don’t get too down or too excited before the deal is done.

Look For incentives…This Is Important

In addition to invoice prices, you can find information on factory incentives on many auto websites. Incentives are typically cash back, a special financing rate, or both. In addition to the standard cash back, there may be incentives for first-time buyers, military personnel, college grads, or owners of competitive brands. Incentives are between you and the factory, and the dealer should not present them as a concession they are making to you. If the choice is between financing and cash back, do the math to determine which saves you the most money.

Aim for Invoice or 10% Below Invoice

Internet research will reveal the invoice price for your chosen vehicle. In general, that’s the price the dealer pays the factory for the car. However, there are other considerations, including dealer holdback and ‘factory “spiffs”‘ that lowers the price the dealer pays. A good rule of thumb is to try to buy the car for the invoice price. Absolutely feel comfortable asking for a price below invoice; don’t try to low-ball the dealer. Shoot for as much as 10 percent off the sticker. You may do no better than the sticker price for a hot new car, but you may even beat invoice for a slower seller or high-volume model.

Never Shop by Monthly Payment

If during negotiations you complain about the high monthly payment, the dealer may try to get you to extend the term of the financing to lower the payment, taking it out to six or even seven years. Be cautious when you consider this it will obviously increase the overall coast of the car. Determine the price on total dollars spent, not the monthly payment.

Should You Lease or Buy

It is true that leasing lowers your monthly payment and you can get more car for less money each month. It is also true that you’ll have no equity when the lease is up and you may also be subject to extra charges. Generally, if you drive more than 12,000 miles per year, a lease doesn’t make sense.

Be Prepared to Walk Away

If at any time during the negotiation you don’t feel that you are getting a fair price, walk away. This can mean going out to lunch for an hour or leaving for good. If a salesperson thinks you are serious about buying and you’re both close to a deal, they will likely do what it takes to get the deal done. That may mean a call later or they might even chase you out the door.

Don’t Buy the Extras

You should only pay the purchase price, the destination charge, the documentation fee, the tax for your area, and the title and license plate charges. The documentation fee is a charge for storing documents and doing paperwork, and it’s usually fixed by state law. The destination charge is the cost of trucking the vehicle from the factory to the dealer. Don’t pay for items such as paint guard, rustproofing, advertising and Internet fees.

Clean and Detail Your Trade-In

Research your car’s trade-in value on sites such as MSN Autos or KBB.com to make sure you get a decent price. Also check sites such as Craigslist and Autotrader.com to see the private-party prices of cars similar to yours. You may even want to get a quote from a company such as CarMax that will buy your car outright. You won’t get as much from a dealer as you will by selling it privately, but listing a car and dealing with buyers can be a pain.

A Trade-In Should Be a Separate Transaction

Separate the trade-in from the sale price. You have to be vigilant in each part of the buying process; you can get the best price on a car, but lose it all on the trade-in. Finish negotiating the sale price, then negotiate your trade-in value. Be sure to add the sales tax savings to the trade-in price, since you only pay tax on the difference between the sale price and the trade-in value.

Consider Financing

Before going to a dealer, get a quote on new car financing. Contact your bank or credit union which will give you better terms. Scour the Internet for other offers as well. Compare those rates to what the dealer offers and pick the best one. You can negotiate the finance rate. If the rate seems high, suggest a percentage point less. The finance manager will likely say no, especially if your credit is shaky, but you could get a quarter or a half a point off the rate.

Don’t Bite On the Upsell in the Finance Office

It’s also the finance manager’s job to upsell you on several items, including extended warranties, paint protection, wheel locks, tire and wheel protection packages, and floor mats, and other incidentals. You need to say no or negotiate the price down if it is a must have.

How Do You Feel

If you followed the Tips To Get the Best Deal on a New Car you should have been successful.  It is about having a plan and following that plan.

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