Buying a new car is a major expense, so any money you can save will make a difference. Unfortunately, you can't always rely on your existing car to bring in much money as a trade-in, but there are some other simple things you can do to keep your costs down. Keep reading to learn some frugal tips for shopping smart when buying a new car.
- Do your research ahead of time. If you walk onto a used car lot without any idea what you want, you will be starting at a disadvantage. Know what kind of car you want and how much you're willing to spend before you even think about shopping.
- Get a quote from a financing institution before you go. If you need to finance your purchase, your options may be limited with the dealership. Get a quote from an outside institution such as a bank or credit union and walk onto the lot with a paper copy to use in negotiating a lower financing rate with the dealership.
- Take your time shopping around. Unless it's an emergency and you need a new car right away, you can save money by shopping around for the best deal. You should also consider timing your purchase at the end of the month or at the very end of a holiday sale when dealerships still have quotas to meet.
- Negotiate on absolutely everything. Let the salespersons know up front that you're looking for a good deal and don't let them push you around. When it comes time to talk numbers, start with a low number and work backward. If you're financing the purchase and the salesperson offers you a monthly payment for 60 months, say you want the same payment with a 48-month loan.
- Consider both new and used cars. You may think that buying a used car is always going to be cheaper than buying a new car, but that's not necessarily true. Many dealerships offer zero-percent financing on new vehicles so, while the purchase price may be higher, you might actually save money instead of paying interest to finance a used car purchase.
- Buy based on the total cost instead of monthly costs. Salespeople use monthly payment costs to negotiate, but they don't always tell you how many months you'll be paying the loan for or the total amount you'll be paying. Always negotiate for the total price of the car and then break it down into monthly payments.
- Don't mention your trade-in until the end. The salesperson will always ask if you have a vehicle to trade in, but you should save it until the very end so you can knock a couple of hundred extra dollars off the price (or more). Negotiate for the car first, then mention your trade-in.
- Consider all of the extra costs. Buying a car is expensive, but you also have plenty of additional costs to factor in such as license plates, fees, and insurance. When negotiating for the car itself, negotiate for the total cost - don't let the salesperson add the fees after. You should also keep your insurance costs in mind when determining your maximum budget.