A new car can be an exciting possibility—but that excitement often fades at the prospect of shopping—and negotiating—for said car. Just the thought of navigating an automobile purchase is enough to motivate you to keep driving your old one. But if that old car is on its last legs, it may be time to start shopping.
Have no fear. Follow these tips for negotiating the best price and avoiding some of the classic car sales traps.
Know before you go. Do your homework at home—without the hungry salesperson looking over your shoulder. If you know exactly what you’re looking for—and what you’re willing to spend—you’ll save time and prevent sales pressure and a potential impulse buy.
- Identify your needs. Do you need room for four kids? Do you need all-wheel drive? Do you prefer automatic or manual? How important is gas mileage?
- Determine your budget. How much can you afford to spend on a car? What is your upper limit?
- Do some research. Which cars match your needs and budget? Start searching—but dig deeper than the car manufacturers websites. Talk to friends. Check Consumer Reports. Educate yourself.
- Narrow the list. Make a list of three cars that could meet your needs and your budget. Try to keep emotions out of it—stay open to all three cars without any attachments.
- Stay in the driver’s seat. Make sure you drive the purchase rather than letting the salesperson talk you into something.
Shop for credit first. Pre-arrange financing in order to stay in the best bargaining position.
Beware the trap of the low monthly payment. Low monthly payments may translate to a longer loan period—which means you’ll pay more in the end. The payments may seem more bearable in the short-term, but you’ll may more interest over the long-term. What’s more—you could end up being “upside down” on the loan—meaning that by the time you decide to sell it, you will owe more than the car is worth.
Leasing may not save you money. Leasing can seem like a big money-saver, but it’s important to look at the big picture and do all of the math. When you lease a car, you’re essentially paying for the difference in the car’s value from the day you take it until the day you return it—plus interest and fees. Once the lease term is up, you don’t have a car. You could buy the car at the end of the lease term, but you’ll end up paying more than if you had just purchased it outright from the start
Beware the extended warranty. Most car warranties cover the big stuff—read, the expensive stuff—like the engine and transmission for as long as five to 10 years. Everything else is typically covered for three years or 50,000 miles. Do you really need an extended warranty if the big stuff is already covered for a long time? Think carefully about the extended warranty and get all the facts first.
Know the value of your old car. Check the blue book value on your old vehicle to determine what your trade-in is worth. Most dealers will low-ball you on the trade-in. Sometimes you can get more for the car by selling it yourself.