Buying a new car is exciting. Often a new vehicle is the first purchase made by young adults moving out on their own and establishing their own careers. Unfortunately, the heady smell of new car upholstery often clouds the mind of the buyer and leaves him with the car he wants and a payment he didn’t.
If you are considering buying a new car, take heed of the following to ensure you get the best deal possible and arrange a price you can live with.
Do Your Research
The average car buyer pays 11% or more less than the sticker price on a new vehicle. Of course the dealer is not going to simply offer a reduced price to every person who walks though the door. Only those who have done their homework and planned ahead can walk out of a dealership with the kind of deal that makes others envious.
Car prices shown by dealers are the Manufacturer’s Suggested Retail Price (MSRP.) MSRP is considerably higher than what the dealer paid for the car, or the invoice price. Even with the inflated fees for shipping and upgrades, car dealers stand to make a lot of money from those who are uneducated enough to pay MSRP.
Now, in certain situations, it is impossible to get a vehicle for less than MSRP. If you are ordering a specialty item or preordering a new model to try and be the first to have it, you’ll pay a pretty penny. To each his own, but if waiting a few months or a year can save you thousands, do you really have to be the first on your street with the new whatever in your driveway?
Expect to Haggle
Haggling is what makes car buying an adventure. Some dealerships offer “no haggle” pricing, but that is usually more than a savvy buyer can get at another dealership. If haggling is unsavory to you, use other methods such as professional car buyers or the internet to arrange a vehicle purchase. Walking onto the lot is an open invitation to start the car buying games. Be ready.
To buy a new car, in most cases you should follow these steps:
Visit a car lot not with the intent to buy, but with the intent to look and see. Find a vehicle you like and get as much information about that vehicle from the dealer. The dealer will try to make you stay and buy, but resist. You must go home and do your research before signing any paperwork or shaking on any deals.
Find out what the dealer paid for the vehicle in question. You should have the model and included packages. Get online and find the invoice price. It’s out there. You should never pay more than $300-1000 over invoice.
Look for rebates and specials. Most car companies offer some sort of special at a given time. Rebates and special financing can save you even more.
Get preapproved for financing online through the car company or through another bank. This saves time at the dealership and keeps the power in your hands.
Go back to the dealer and tell him your terms. Start with a price slightly below your target. Ignore any protestations about false internet prices or overhead. Also, make them move. Salespeople try to keep you in the showroom long enough to wait you out. Don’t tolerate it. In fact, you can do most of the buying over the phone or through email. You know the car, you know the price – you just need to get them to draw up the paperwork after they agree to your price.
Double check the paperwork. You don’t need extended warranties or any of the extras rolled into your payments. The interest rate should match the one you were approved for and be sure all the numbers match your agreed upon amounts.
Then sign away and get your keys!