Buying a new car is a stressful process, but it doesn't have to be. With the right preparation and knowledge, you can save money and get the best deal. From calculating your budget to finding the right car and finishing all the paperwork, there are many steps to take before you buy a car. Here are 30 tips to help you save money when buying a new car.
Before you enter the dealership, make sure you know how you'll use your car. Assess your family's needs, the demands of your trip to work, and the vehicle's core purpose before narrowing down your selection. Use a widely accepted source, such as Kelley Blue Book, to find out the fair market value and average sales price of the car you're considering. When car dealers know you've done your homework, they're more likely to offer their best deal first.Your credit score is an important factor when buying a car.
Its FICO credit rating, which ranges from 300 to 850, is a rough representation of the risk it poses to lenders. Dealers that share a brand name often have different inventories and different prices or offers, so don't assume that the new cars you're buying are the same at two dealerships.Price is an important factor when buying a car, but don't let that be the only factor. Sacrificing quality for price will likely cost you more money in the long run. Don't fall in love at first sight.
Try different makes and models of vehicles to find the type of car you really want. Compare dealerships that offer concierge test drive service for a sales representative to give you the test drive.Don't reveal your cards until you have to. If you tell the dealer what you expect to pay each month, you give them your leverage. Most people go into the buying process knowing approximately what they can afford each month, but obsessing over monthly payments can cause you to ignore important considerations or cost you hundreds or even thousands of dollars.Sometimes it's just not possible to get a dealer to lower the price of the sticker.
But that doesn't mean you can't save money. Even if they do it to try to get the best rate, dealers can inadvertently hurt you by buying your application from too many lenders at the same time.As the year ends, dealers are looking to dispose of their remaining inventory in anticipation of receiving New Year's models, making early winter a good time to shop for offers. It's your job to keep “hidden expenses” in mind beforehand. The value of your car decreases the moment you take it out of the parking lot.Unless you're looking for 0% interest rates or other low incentivized interest rates, it's best to buy a car with cash.
If you have to borrow, do so conservatively. Get the best possible rate and keep loans for no longer than 36 months and try to put 20%.The average American spends 10 hours buying a car, compared to just five hours buying a home loan. Some buyers become so obsessed with getting the “best deal” that they are willing to spend weeks buying a car. But at what price? You can submit an application to multiple lenders within 14 days and it only counts as a query on your credit report.
From there, you will normally have 30 days to go around with your quote. This gives you time to find the best rates and the dealers that offer the best deals. If the vehicle you want is out of your budget, consider buying a mildly used model of the same car. With inventories so low, make sure you're ready to buy when you find a car that's available at a competitive price.
According to Oren Weintraub, president of Authority Auto, a car-buying concierge service in the Los Angeles area, with low inventories and high buyer demand, dealers are burdening their cars with profit increases. Know how much your current car is worth before going into negotiations with dealerships. This will help ensure that any trade-in value offered is fair and accurate. And don't forget about optimism bias - don't overestimate how long you'll keep your new car for.
Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We have maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in what steps to take next.
