How to Save Money When Buying a New Car

by | Dec 10, 2018 | Uncategorized

When car shopping, think in terms of an execution plan with suggested steps listed below:

  1. Decide what car you want to buy, including options and colors.
  2. Research pricing, for an idea of the maximum price you would pay, recognizing that you could pay less by shopping around. No matter how much research you do, the only way to get the best price is by shopping around because every dealer has its own unique situation on pricing philosophy, sales volume, and standing for manufacturers’ incentives.
  3. Create a list of dealers within a reasonable driving radius (maybe 100 miles or so) from home, noting the distance, and their phone numbers.
  4. Call each dealer, asking to speak with their sales manager, for a quote on the specific car you determined in step 1. Let them know you are a cash buyer, just shopping for the best “out the door” price. Any dealer fees, such document preparation, that must legally be charged to everyone or no-one can be backed out of the purchase price. The important number to focus on is your total cost. I typically like to work on the total dealer cost, excluding sales taxes and state department of motor vehicle fees.
  5. Keep notes on the name of the sales manager with whom you spoke and the amount of their quote (it’s ok to let them get back to you).
  6. Review the prices, once you have all of them. Then call the dealer with the 2nd lowest quote and tell him/her that you have shopped around and to sell the car, he needs to be at a specific price [take the lowest price and subract $500]. Keep doing that until no one will go lower.
  7. Ask the dealer who gave the lowest quote, after going around a few times, to send the quote to you in writing by email. If everything looks right (no surprise fees), then this is your car to buy.
  8. Financing: Figure out financing by checking Edmunds for manufacturer’s incentives, including low interest rates. Compare rates to PenFed and others. Decide on a lender, based on low rates, no fees, and no penalty for paying off the loan early.
  9. Selling old car: Research the value of your car on car fax. They will tell you what the car is worth on trade-in and selling it yourself. You may want to apply a discount for any repair work needed.
  10. Take the vehicle you are selling (possible trade-in) to the dealer you selected for the car purchase and ask what they will give you for the old car. Whatever they offer is negotiable, despite what they may say at first. If selling you the new car depends on them paying you something more than their first offer for your old car, they will most likely do it. However, you may need to haggle, including walking out of the dealership. Compare the dealer’s offer for your car with the information you got in step 9.
  11. Decide whether or not to trade in your car or sell it on your own.
  12. Make your purchase.

It’s extremely helpful to your negotiation if you are not in a rush with the dealers. In this situation, slow movers typically do best.

When on the phone, it’s fine to simply tell the dealer you will shop elsewhere if you don’t like anything about their approach, process, or price. Also, once you are in the dealership to buy the vehicle, if ANYTHING isn’t right, just say what you dislike and get up to walk out. They hate to have someone leave and will typically back down. If they don’t, you have your list with the next best deal to pursue.

The more patient and slow moving you are on buying the vehicle, the lower the price you will likely receive. You want to move at as painfully slow a pace as possible, giving each of the dealers time to stew over a possible sale.

As they need to meet a quota, they may come back to you with an incredible offer. As a result, it’s helpful to get your initial quotes and make the rounds, but wait a few weeks for additional offers to come in. The end of each month and end of year are especially good times to negotiate a great price because some dealers need a few more sales to reach another level of incentives that is worth more to them than a large discount on any one car.