Buying a car is one of the most important financial decisions you can make. Picking the right car is one thing, but paying the right price for it is a whole other challenge.
And getting the best deal can mean saving thousands — or even more — in the long run.
Read below for the 12 best ways to pay less for your next car.
A dealership makes money when you buy a car. But they can make a whole lot more if you add on extras like an extended warranty, car tinting or wheel protection. Every extra you say yes to is another dollar in their pocket.
Almost all the extras they’ll offer you will cost you more in the long run. That’s because they can roll those extras into the financing agreement, which means you’ll pay interest on them.
When you buy a car from a dealership, they will add on the state’s mandated registration fee to the purchase price. This is the price you’ll pay to register your car. Most of the time, this fee is accurate and equal to how much you would pay the state directly.
In rare cases, you may be overcharged. An honest dealership would contact you directly and refund the money. However, in some instances, they may choose to pocket the difference themselves. When you get the registration paperwork, compare the fee to the one you paid.
No matter what you agreed to verbally, it doesn’t matter if the written contract is different. Make sure to compare the written financing agreement to what you verbally agreed to. If there's any difference, you must point it out before signing on the dotted line.
Before buying a car, you should try to get pre-approved with your own lender. Try to compare rates and terms with at least three lenders before settling on one. If possible, try to get preapproved with a credit union or a lender you already have a loan with — they may have better rates than other companies.
However, don't mention that you have your own financing until you’ve already agreed on a price. Dealerships make money in part off their financing department. So if they think you already have another lender in mind, they may be less willing to work with you.
When you finance a car at a dealership, you’ll be transferred to the finance department once you’ve agreed to purchase the vehicle. At this point, they may try to convince you to buy some extras that you had already declined.
If something isn't right and they are not willing to correct it, you have to be willing to walk away, even if you've already spent hours at the dealership. Car salesmen know that most people will fall for the sunk cost fallacy, even if that means spending thousands of dollars more.
Buying a car is one of the biggest purchases you’ll ever make, except for buying a house. And like any other financial transaction, it helps to get everything in writing. For example, if a dealer promises to include a free three-year extended warranty make sure to have a record of this.
That’s why it’s better to text or email the dealer instead of calling them. If you have it in writing, then you have proof.
An educated buyer is less likely to get ripped off. To do that, you should do lots of research on the car you want.
For example, make sure you know how much the typical price is for your perfect car, including the exact trim, general mileage and any other extra features. Use the notes app on your phone to write down this info. This will ensure that you don’t pay above market value.
If you live in a major urban area, then you may have lots of dealerships near you. And while you can find your dream car locally, it may pay to venture outside of your immediate area.
You may want to consider looking at dealerships that are in more rural areas. They may have more incentives and be able to offer you a better deal. And while it can be a hassle to drive a long distance just to look at a car, it could save you thousands.
It used to be that buying a slightly used car was better financially than buying new, if you wanted to maximize your savings. But nowadays, that isn’t necessarily true.
New cars may have better financing deals than used cars. Before you pick out a car, compare the dealership’s financing offers to see which one offers more bang for your buck.
If you find a car you like at several dealerships, use their own bargaining power against them. Here’s how. Try to find at least four dealerships with the car you want. Figure out how much you want to pay. Call each dealership and ask them for the lowest price they can offer and tell them you’re comparing prices with a few other dealerships. When you get a lower price, call another dealership and ask them to beat it. Do this until you've gotten the lowest price possible.
Salespeople have to make quotas, so wait until the end of the month when they’re more likely to work with you. If you go in the first half of the month, they may be less willing to negotiate on price.
Trading in your car may seem easy, but you’ll make more selling it on the private market. Then, you can use the money from the sale to put toward your new car. Just include all the relevant information, list it on a few different sites and be reasonable about price.