This is a guest post from Master Your Card. If you’ve never been there, it’s worth a visit. Not only is the content top notch, but the design is one of the best I’ve seen. I can’t help myself from clicking through to the articles. If you aren’t too impressed by a snazzy layout, I suggest you sign up for his RSS Feed.
Whether you’re buying a car from a dealership or an individual buyer there are things you can do in order to make sure you get the best deal possible. After all, if you’re making a major purchase you should try to save money where you can, right?
Buying a car from a Dealership
Don’t ever accept the sticker price for a vehicle, and don’t ever, ever feel like the dealership isn’t trying to get as much money from you as possible. Car salespeople are taught to get money from you in many different ways, so be on the defensive.
- Walk into the dealership with financing in place. You should always go into the dealership with a check from your bank or credit union already in your hand. It’s a great bargaining tool to get your Toyota Prius on the best finance plan possible. If the dealership can indeed offer you lower interest on financing with better terms then take it, but it’s a good idea to have financing in place in case the dealership can’t beat it.
- Have a plan and stick to it. Tell your salesperson, “I’m going to give you this amount of money for this car, and I will absolutely not spend any more than that.” Don’t pay docking fees or other stuff they add on to make more money. The amount you say you’re going to spend is the amount you’ll spend, period.
- Know the real value of the car. If you’re buying a used car you should find out the real value of the car before you agree to buy it. Bring along a Kelley Blue Book or have access to the Internet to search for the value. Don’t spend more on a car than it’s worth.
- Know the real value of your trade-in. If you are trading in a car you should research its value beforehand. You’ll probably get a better deal if you take the time to sell the car yourself, but trading in can be quite convenient as long as you get a fair price.
- Don’t accept add-ons. Even if you don’t get financing through the dealership they’ll try to talk you into buying credit protection, GAP protection, extended warranties, and all the other add-ons that make them money. Don’t buy these things through the dealership. If you really want them you can usually get them through your lender or another source for a lot less money.
- Go on a day when nobody else does. Is it a torrential rain storm outside? It’s a perfect day to go shop for a car! If you go on a day when nobody else would ever think of browsing at cars you may be able to get a better deal because you might be the only person your salesperson talks to all day. They have quotas to meet, after all.
- Walk away. If you aren’t getting the deal you want then walk out of the dealership. Nine times out of ten you’ll get to the door when
suddenly the salesperson will stop you and accept your terms.
- Have the money in your hand. If the car you’re buying is advertised as $5000, approach the seller with $4000 in cash. The sight of actual cash
is powerful, and may get you the car for much less.
- Haggle. It may feel weird to haggle with someone who isn’t a salesperson by trade, and it may even feel a little impolite. Don’t let
this stop you from negotiating a good deal.
- Show up informed. Have a print out of the car’s value in your hand to show that you know exactly how much the car is worth. Some sellers may
not even be sure what their cars are worth! Don’t pay any more than the smallest value listed.
Buying a Car from an individual
It’s not all that different, but there are a couple of other things to keep in mind:
Negotiating the selling price on a car is a lot like a game. There is a lot of psychology involved and as long as you don’t get intimidated easily you can save quite a bit of money on your car purchase.
Let the games begin.
Kit Kat says
Thank you for sharing this mind game. Will try it out to see the power.
‘have financing in place’ a lot of people mention this tip but everytime I look into bank financing I can never find a decent rate. Any suggestions for outside financing for vehicles?
[email protected]'mGratefulFor says
Got any tips for individuals selling their cars, and how they can get the maximum amount of money for them?
Lazy Man says
Danny, it always helps to have a good credit score. The standard tips apply for that (get credit, use it responsibly, pay it back, etc.). Once that is achieved, I’ve found that credit unions typically offer the best rates.
Solomon, perhaps Master Your Card has some. If not, I’ll try to do some research and come up with something.
rusted pill says
Good advice, especially on the dealership side. One thing I’ve noticed (I just recently bought a car) is that a lot of dealerships also aren’t displaying the accurate mpgs of their vehicles and trying to hop on the green fad as well as make the “fuel efficiency” pitch. This is a situation where it really pays to do the research, because a lot of times the “real world” mpg is very different from the numbers you see on the dealership stat sheets (you also have to bear in mind the nature of your driving, however).
I looked up gas info on sites like Carspace (forums are a good reference) and http://www.carfunfootprint.com (more of a fun site, but the “green” scores they give to cars offer a good way to compare models if you’re like me and don’t want to sift through pages and pages of EPA jargon). There are many others as well. If mpg is important to you (and it should be) it pays to research. You might also ask friends of a particular model you’re considering what kind of mileage they get.
Lazy Man says
The MPGs that you see in the dealer should be all government-controlled tests. Yes, they test in the best possible conditions that you’d never actually drive on, but it makes good sense to standardize on some metric. I wouldn’t want to judge a Kia that been tested in NYC against a Hyundai that has been tested in Chicago. Maybe an extra stop light changes everything.
I think the consumer just has to realize that they are going to get some percentage less than what’s on that sheet, but at least when you compare the sheets it should be the same percentage off.
It’s almost like having a bad bathroom scale. The initial number doesn’t matter much as the comparison from measurement to measurement.
Did a similar post on this topic a couple of weeks back, and a number of similar points. One follow on disucssion was whether gender plays a role in getting a good deal. Does a man get a better deal than a woman or can a woman fiegn ignorance to get a good deal….
Good advice but I’d like to clarify one thing. The Kelly Blue Prices are a good guide but they are nowhere near gospel or even what sellers are close to. Just to take two examples from my own experience, BMWs sell for MORE than book value and Jaguars sell for LESS than book value. The best thing to do when researching car values is to use a combination of KBB, Edmunds.com True Market Value and a wide-area AutoTrader.com search to get a real-world idea of what the vehicle should be selling for.