Car-buying season has arrived along with the hot weather. Car dealerships are close to releasing their new models for the next year and are looking to get rid of the current year’s models. Whether you’re buying a used or new car, this decision is a major one involving thousands of dollars. These tips will help you make the best choice for you while minimizing your costs.
Think twice about monthly payments.
A common myth is that if you can afford the monthly payment, then you can afford the car. While this makes sense on one level, it’s wrong on many other levels. What this means is if you’re working with a dealer, never tell them what kind of monthly payment you are thinking of.
The main reason why you want to hold your ideal monthly payment close to your vest is that the more information you give the dealer, the more they can use it against you. They can do things like adjust rates or offer you a longer term loan. The sad fact is that all of these attempts will only result in you spending more money over the life of the loan for the car.
Shop around for rates.
Assuming you need to finance your car, the interest rate is going to play a big part in how much the car will cost you in the long run. Many dealerships will offer financing as a way to make more money off your business, but that doesn’t necessarily mean their rate is going to be the best option for you.
You should start shopping around for rates before you even head to the dealership. You can check with your main bank as well as ask for referrals from friends. Sometimes the best rates will be through local credit unions. They might require you to open an account with them, but that can be well worth the saving of several percentages points on your loan.
Work with multiple dealers.
The Internet has made it much simpler to buy a car. Gone are the days where you must walk into a dealership and haggle with them for a price that’s good for both. Instead, many dealerships now have departments that deal only with online sales. This is great for you as a consumer as it increases competition and provides more opportunities to get the price you want.
Once you’ve determined the type and model of car you want, reach out to a few of the local dealerships and see what they can offer you in terms of price. Once you hear back from them, this gives you powerful information for you as you physically visit dealerships. You’re empowered to tell them what kind of pricing you can get, which in many cases can save you several thousand dollars on your new car purchase.
Know what you want.
It’s a no-brainer to know what you want in a car that you’re going to buy. Take that a step further and determine what each of those things you want are going to cost you. This can be difficult to do, but Consumer Reports offers a great service – the New Car Price Report. For under $20, it provides information on a specific model of your choosing related to the true cost to the dealer of the car, as well as all of the extras offered. This is invaluable information to have as you consider what car to buy and can save you several thousand dollars on your car purchase.
Buy an old car.
Generally speaking, going the used car route is going to cost you thousands of dollars less. If you really want to buy a new car, the best route is to look at the previous year’s model. This is a great way to save money on your car purchase as dealerships want to get them off their lots to make room for more of their current year models. This will generally result in better pricing or promotions to free up space. You might lose out on some of the newer features, but it can be a great way to save money on a new car.
Buying a car is a major expense. However, with a few simple strategies, you can save a good amount of money on your new car.