5 Tips to Save Money When Buying a New Car
Before I begin, please note that the following advice is just the tip of the iceberg about how to save money when buying a new car. I’ve purchased several vehicles over the years, and these strategies have helped me save thousands of dollars on new cars. Hopefully you’ll find these tips useful, too.
Know What You Want
The first tip is to decide what you want to buy. This sounds obvious, but many times people begin to car shop by visiting dealerships, which can expose you to high-pressure sales without the necessary research to negotiate effectively.
Until you know what you want to buy, avoid the dealerships. If you want to see some of the vehicles in person, after hours is a great time to walk around dealership lots and look at vehicles without any pressure to buy.
Do Your Homework
I personally recommend Fighting Chance and have used their service multiple times over the years. It does cost to use this service (pricing starts at about $45), but I have found it to be an incredible tool for helping me save the maximum amount on a new vehicle purchase.
Also, don’t be scared off by the simple look of the website. The content contained within the Fighting Chance system is excellent and pays for itself many times over in what you’ll save on your new vehicle purchase price.
Get Competitive Price Quotes from as Many Dealerships as You Can
This tip is important and can be done by calling or emailing dealerships. I personally like emailing because it allows you to have more control of the process by avoiding a sales pitch.
The idea here is that since you’ve already determined what you want to buy, and since you know what the actual dealer invoice price is, you have the tools needed to get dealerships to bid against each other for your business.
To get the quotes, pick 10-20 dealerships within a couple hundred miles of where you live as your targets. Address your communication to the new car internet sales manager or new car sales manager and let the dealerships know specifically what you plan to buy. You’ll be requesting their best “all-in” price for the vehicle of your choice.
Make sure the price they quote is the complete price out the door with no hidden fees. Basically, you’re giving them one chance to earn your business. Let them know you’re serious about buying from the dealership that gives you the best price quote. If they want to earn your business, they’ll have to beat out the other dealerships.
It also helps to spell out for them that you have done your homework and will only decide where to buy based on their one chance at a bid. If they know you’re a knowledgeable customer, most sales managers will give you their best price up front.
Timing is Important
Typically, the best time to contact dealerships is the middle of the week, preferably late in the month, even more preferably late in the year when dealerships are more willing to offer deals in order to meet sales goals.
The Fighting Chance website is by far the best resource I’ve found online to help determine pricing. They provide the actual dealer pricing for vehicles and options, as well as templates to use for the competitive bidding process.
Know What Your Trade-In is Worth
While you’re researching good deals for new vehicles, you should also understand the value of your trade-in. Review the Kelly Blue Book website to educate yourself on the fair market value for your current used car. To compare similar vehicles and asking prices, visit a website like Auto Trader that has a large selection of vehicles.
As a rule of thumb, I prefer to leave out of the deal any trade-in until after I’ve negotiated a price for my new car. It can get a bit confusing when the dealership begins including a “trade difference” number in the price.
For example, if you negotiate to buy a $20,000 car, but have a trade-in the dealership wants for $10,000, the trade difference would be $10,000. You might look at a $10,000 trade difference figure and think it’s a great deal, but what if your trade-in is actually worth $12,000? Suddenly, you’re out $2,000.
Beware the Payment Question
Another common strategy during the sales process is to ask what payment you can afford. This is absolutely the worst way for you to look at the deal since the dealer can charge the price they want and then stretch the payments over time.
In this scenario, you pay more over time but with smaller payments. Here’s the bottom line, if you get the best deal possible on your new car AND the most money possible for your trade-in, then you’re actually getting a good deal on the entire transaction.
Don’t Buy Additional Items You Don’t Need
If you’ve made it to this step, you’ve agreed to a deal and are now working with the finance manager.
As a general rule, many dealer add-ons aren’t worth the price you’ll pay to get them, such as some kind of spray protectant that sounds good but quite simply costs a lot for any perceived benefit.
However, you may decide you want to add something like an extended warranty. Keep in mind that these items are negotiable too, so part of your research should include finding out the dealer cost for these items and negotiate accordingly.
Just because you saved a lot of money negotiating up to this point doesn’t mean you shouldn’t continue to save until the end of the process.
I hope this advice helps you save money on your next new car purchase. I can tell you from personal experience that I have used this advice to save thousands of dollars myself.
Bonus Money-Saving Tip!
After you have saved money on your new car, take a look at how you can save more money on insurance for your new vehicle. Start by selecting your state to see how you can save up to 10% on your auto insurance premiums.