Meta: Getting the best deal on your new car is vital. Dealerships are notorious for their sketchy tactics, which is why being smart is critical.
Buying a car can be a stressful experience, especially if you have to deal with sleazy salespeople who earn pay on commission. They are actively incentivized to ensure that you get the worst deal possible, which is why you need to take matters into your own hands by learning how to get the best deal on a new car, every time!
With a little extra footwork, you can drastically improve the price that you end up paying, as well as getting extra goodies and saving yourself the hassle. Truthfully, you want to do everything that you can to avoid scams. Therefore, you need to flip the tables and take control of the negotiations to earn yourself the best deal.
With the internet as your tool of choice, you have access to more information than ever before. Research is easy and rapid, allowing you to find out the typical cost of different models quickly. You can also use it to get quotes without having to talk to salespeople who will try to manipulate you in person via their sales tactics.
Realistically Assess Your Needs
The first step is to look objectively at your needs and to assess them critically. The reality of the situation is that most people purchase new cars which are out of their price range and don’t accurately portray their needs. You should consider:
- How often you are driving
- How far you drive
- Your budget
- Typical number of passengers
- Luggage needs
All of these factors will greatly impact which vehicle is right for you. The most comical example is always the parent who is looking for a small sedan or two-seat convertible when they have four or more children, all of whom play sports. In this case, reality takes over, and you need to look for a larger car with plenty of storage space as well as more seats.
On the flip side, if you’re by yourself and you drive long distances regularly, a truck or sports car probably aren’t the best choices. A sedan or hatchback most likely makes more sense because it will give you greater fuel efficiency and comfort without the added cost for features that you don’t need.
This realistic approach to purchasing a car is critical to getting the best deal. Regardless of how much you pay, you’re not getting bang for your buck if you pay for features that you’re never using. Plus, it’s not only the upfront price that you need to consider but also the cost of upkeep, insurance, and gas. All of these will depend greatly upon the vehicle you choose.
The most important factor in this entire guide is the vehicle which you pick. Hence, if you take one tidbit of information away, you should be realistic about your needs and choose a model which is going to fit your life and budget. Overextending yourself or picking the wrong model can be disastrous to your financial situation going forward.
Create a Budget
When it comes to creating a budget, you need to not only think about the initial payment but also the ongoing costs of ownership. New cars tend to have fewer problems, at least in the initial period, than older models. However, that doesn’t mean that you won’t experience any issues, particularly if you are to get into a crash that’s your fault.
Likewise, insurance can be sizeable on newer vehicles because the cost of replacing parts can be high. Therefore, you should always look into getting a quote for the model of car you’re looking at before you buy. By doing so, you’ll have a much better idea of how much you should expect to pay every month for operating the machine.
Gas can also differ. You shouldn’t always expect that the cost of fuel will be the same for your new model as with the last. If you change to a less efficient vehicle, you’ll need to pay more to travel the same distance, keep this in mind and create yourself a simple spreadsheet that you can use to calculate the ongoing price.
In this spreadsheet, you should include all of the factors that you can consider and align them next to each other. If you’re looking at a range of models, you can put the data in separate columns and easily compare them to see how much more expensive one is than another. By doing so, you can prevent yourself from a sudden financial shock.
Studies have shown that much of the value of a vehicle disappears as soon as you start operating it. Therefore, depreciation will drastically reduce the resale value of the car once you’re off the dealer’s lot. Keep this in mind if you are planning only to keep the car for a short period, rather than riding it for years and into the ground.
Truthfully, it’s important to realize that no matter whether you know how to get the best deal on a new car every time, it’s still more expensive than buying used products. This depreciation works oppositely, meaning that buying slightly used cars typically offers the best bang for your buck, especially if you’re operating with a tight budget.
On the flip side, there are a huge number of intangible benefits to owning a new car. It’s nice to have a warranty, as well as knowing that you’re the first and only person to own it. Therefore, if you’ve looked into the costs carefully and still decide that you’d prefer a newer version, don’t be afraid to stick with your gut and buy a fresh model from a dealer.
Establish a Target Price
With your budget in place, you should establish a target price that you want to work towards. It’s necessary for you to get a rough estimate of the average selling price for the model at which you’re looking. Doing this is easy thanks to the internet. With a few searches, you’ll be able to identify the price that previous customers have paid easily.
During your research, keep a close eye on the numbers and identify the lowest that you find. If this is within your budget, you might set it as your target price. Whereas if it’s still too expensive, you might set your target price lower to ensure that you can pay for it when you make a deal.
Keep in mind; dealers have some flexibility when it comes to pricing. However, they might only be able to adjust by 10% or less. You shouldn’t expect to save tens of thousands of dollars. Be realistic with your approach to negotiation, and you’ll get a better response from the dealers that you work with because you’re not wasting their time and they won’t waste yours.
The target price that you come to should include every last cent. It’s pointless for you to look at only the base cost when you know that you’ll need to pay for extras, dealer costs, and any other fees which are associated with registering the vehicle. Each dealership has different prices for these factors, and therefore it’s vital that you include them into your target estimation.
By keeping them in the list and at the top of your mind, you can prevent yourself from getting hustled into a seemingly low price that’s far more expensive at the end of the day. These sneaky tactics are often used by unscrupulous dealers and salespeople to add extra profit to their records, without increasing the on-paper cost of the actual vehicle.
If after your research you find that the real target price for the model is out of your budget, you’ll need to consider whether it’s a smart decision for you to make. Often, choose a cheaper alternative can save you from financial stress. Otherwise, you could look for loan or dealer options which can spread the cost out of a more extended period to reduce the monthly payments.
Determine Your Current Vehicles Value
Presumably, you’ve considered trading your existing vehicle in. By doing so, with the same dealer that you buy from, you can usually get an excellent deal for it and therefore can save yourself a considerable amount of money. The dealer often gives you an excellent deal to incentivize you to buy from them, whereby they will make a large profit margin and make up the loss.
However, this isn’t always the case and sometimes selling your existing model online or through a third-party can be a better option. As always, the more research that you perform, the more likely that you will receive a fair offer that works for you and your family. Don’t be afraid to ask each dealer what the trade-in offer is and whether it can increase.
It’s common that trade-in prices are more negotiable than the cost of the new machine. Hence, it can be the right spot for you to negotiate. Likewise, you should ask whether there are any other bonuses for trading your vehicle. Sometimes they will throw in extras or extend your loan period to reduce the potential monthly interest and payments that you have to make.
To calculate the value of your current machine, you should look at websites like Autotrader, as well as talking to local professionals. Depending on the condition of it, as well as the number of miles that you have driven, you might find that an individual is willing to pay much more than the dealer. For more modern cars, this is very often the case.
For the buyer, they can skip the middle person, and therefore save themselves on dealer fees as well as the profit margin which the dealer will squeeze into the negotiation. Consequently, they might be able to pay you a more substantial fee directly than the dealership would be able to match. However, you won’t get any trade-in bonuses.
For this reason, it’s vital that you ask around when you’re negotiating. Ideally, you should get a very accurate estimate of what you could sell your current version for online directly to a driver before you contact the dealers. By doing so, you’ll be able to rebuke their offers and have a better idea of whether they are giving you a fair shake or not.
Remember, the value of your existing car isn’t stagnant. You can do things to increase it. One of these would be to wash and clean the vehicle. By keeping it in a good condition when you advertise it to a third-party or a dealer, you increase the chance of them paying you a fair fee to exchange it.
Likewise, if there are problems with it running, you might choose to get these fixed before you trade it into the dealership or sell it online. Fixing problems can often add value beyond the cost of the mechanic’s work, allowing you to make a profit for your efforts and therefore to save cash on the purchase of your new car.
Trial the Car
One of the most common mistakes that people make, especially young buyers, is failing to test the car before you buy. It’s easy to take a look at it and then buy online or order it through the dealer, but you won’t know if it’s right for you until you get behind the wheel and take it for a spin.
There are small differences in each model that can make a significant impact on the joy of driving. One would be the movement of the steering wheel. If you’re tall or unusually short, specific models of the car can be uncomfortable because the wheel block doesn’t adjust to a position that is comfortable for you to drive.
Given that you’re going to spend tens of thousands of dollars on a new machine, you should at least drive it a couple of times to ensure that it’s right for you and your family. It might also handle differently than you expect, particularly if you’re changing vehicle type, say from a sedan to a truck or from a sports car to a hatchback.
It’s also important for you to see how much space is available. If you never see it in person and take it for a spin with your family, it can be tough to know whether it’s going to be enough for your needs. Don’t be afraid to go down to a dealer and ask for a test ride, be upfront and admit that you’re not ready to buy for a little while yet.
On the flip side, you could wait until you’ve already found a good price and the right dealership before you take it for a spin. The problem with this is that you could waste a lot of time and energy if you only decide that it’s the wrong model after you’ve done hours of research. For this reason, we suggest doing it straight away, but being honest with the dealership.
One reason why customers don’t do this is that they are afraid of being pressured to purchase. Salespeople are incredible at applying the heat. For this reason, you need to go in with the right mentality and be very firm in your position. Let them know upfront that you need a quick test drive and won’t sign anything or do anything until you’re ready, weeks from now.
Search for the Best Deal Possible
When you’ve decided 100% that you’ve found the model that you want, it’s time to start searching for the best deal possible. You’ve already figured out what you want, how much you can afford and the target price that you’re searching to get. With this information in hand, you’ll be able to negotiate much quicker and more efficiently with any dealership.
The biggest mistake that customers make at this stage is to get into their car and drive to see the local dealers. The result is that they get sold, they get manipulated, and they don’t get an honest quote that can compare to the alternatives. Whatever you do, don’t leave your house until you are ready to make the purchase and send over the money.
The easiest way to get a quote is through an online website form. Almost every dealer in the nation has a quote form now and will reply to you within a couple of days. This is how to get the best deal on a new car, because you get all the information, without having to put up with the rubbish that some unscrupulous dealers will pull on you.
If they don’t have a form, give the number on their website a call and ask for a specific quote on the model that you need. They should have the information on hand. They might ask you to come in for a consultation to get the quote, reject this offer and demand that they give you the figure over the phone before you waste time coming to their location.
With all the data handy, you can easily see which is the best price. From there, it’s time to start pushing each dealer to match the others. A big mistake that people make is to completely rule out the most expensive options, presuming that they won’t drop to match the cheaper alternatives. Often, this is false and can cost you money.
Call every single dealer and ask them to beat the best price and once you have a new best price, continue until everybody has rejected you. Don’t limit yourself; make the dealer tell you no. You can’t get a better price unless you ask, which is why you need to continue negotiating until everybody has told you no.
At that point, you will know that you have secured the very best deal possible. Keep this and the second option in mind, because now you’ll need to negotiate the specifics of the deal, which include extras and any dealer fees. By continuing to force them to match each other going forward, you can save even more money on the total payment cost.
Negotiate the Specifics
Very few people have enough money in their bank accounts to pay for a new vehicle upfront. If you do, it’s most likely the best decision. The only exception to this rule will be if you can take a 0% interest loan. The reason is that the credit is free and you can keep a lump sum in your bank where it will earn interest in the meantime.
Unfortunately, 0% interest loans are less conventional than they used to be. Most often, they are a few percents each year, making them far less tempting. If the interest on the loan is more than you would get from your bank, it’s going to be best to pay upfront with cash if you have this ability.
If not, another option you could consider is a loan to pay monthly. Most dealerships or manufacturers will offer some payment plan, but that doesn’t mean that you should go with it. You also can get a third-party loan, which might provide you with a better rate or a more extended payment period which would mean lower monthly payments.
Depending on your needs, it’s often worth asking your bank if you can get a loan from them to pay for the vehicle. They will typically give you a low rate because they have the asset as collateral. Therefore, you might get a more affordable payment plan with your bank or an online loan company.
Watch Out for Sneaky Tactics
Dealers have a terrible reputation, and unfortunately, it’s one that they’ve earned themselves. They often try to sneak in fees and other things into their contracts. As a result, you need to pay very close attention to the agreement that you sign, as well as the last payment receipt.
One of these such fees is a dealership charge, which is necessarily a fee for using the services of the sales team. Of course, this makes absolutely no sense because you’re buying from them and that’s where they make the profit. These charges are an attempt to generate extra free money.
You shouldn’t pay for any extra fees like this, including a lotting fee, which they will claim is for the storage and removal of the vehicle from the lot when you request it. Again, this is part of the price you’re paying for, and therefore you should contest the fee. With a little negotiation, most dealers will drop the fee if you flat out refuse to pay the cost.