When you drive your new car out of the parking lot, make sure you don’t pay more than you need.
Getting the best car deals for you may require advanced research, comparative shopping and negotiation. If your focus is mainly on the monthly payment, you may also need to change your mind. In order to find the best car deals, you need to consider the car price and your financing separately.
Here are three tips to help you get the best car deals.
1. Study the price range
You may have done a lot of research and conducted some test drives to determine which car you want to buy. Keep your research cap and find a suitable price range for your car.
You may encounter several price terms in your research or at a car dealer.
The invoice price is the amount paid by the dealer to the manufacturer for the vehicle and may include destination and delivery costs. However, the profit of dealers is not only determined by the difference between the invoice price and the sales price, because manufacturers often give dealers rebates, discounts or other sales incentives.
The manufacturer’s suggested retail price, or list price, is the price at which the manufacturer thinks the dealer should sell the car. The dealer must display the suggested retail price on the window of the car, but can choose to sell the car at more or less the price.
Edmund’s and Kelley Blue Book’s pricing tools show the invoice and suggested retail prices of vehicles, as well as the fair market value of new and used vehicles. Fair market value is an estimate of how much you should pay for a car based on its brand, model, features and recent sales.
Knowing these prices can help you understand the price range of the car and help you find the right car for your budget.
2. Apply for auto loan pre approval
If you plan to buy a car in cash, you can skip this step. But most buyers buy new cars through car loans.
If you already know the estimated cost of the car, you can apply for a pre approved car loan. The lender’s conditional approval can include estimated terms, such as the amount of money you can borrow, the term of the loan and the interest rate. Although pre approval does not mean that your loan has been approved, it can help you understand whether you are likely to be approved and the loan terms you may meet. Applying for pre approval can lead to a hard query on your credit report.
Before you go to the dealer, there is a pre approval proposal from the lender that allows you to focus on negotiating the price of the car rather than negotiating the terms of the loan.
Studying several lending institutions can also help you save money – you can choose the one that suits your financial situation best.
But don’t write off the dealer completely. Dealers may be willing to try to break the terms of your pre approved offer. If you are buying a new car, have good credit, and it is available, you are eligible for a car loan with an annual interest rate of 0%.
3. Negotiate with car dealers
If you want to get the best price, negotiation is very important. You may feel uncomfortable or even depressed, but it may help to use the facts you collected in the first step.
Focus on car price alone
First, if you plan to finance with a dealer or want to change a car, negotiate these parts of the deal separately. First, focus only on car prices. Otherwise, the auto sales assistant may try to shift the topic to your monthly payment.
It can be tricky. For example, a dealer may provide a lower monthly payment by extending the term of your loan, but a longer repayment period may mean that you pay more interest on the loan and take the risk of reversal.
Know the price outside
It’s better to start the negotiation from the invoice price to the fair market value. But make sure you and the dealer negotiate the same number – your final, external price. Outdoor prices include sales tax, registration, ownership and dealer fees, which are not included in the recommended retail price. If you don’t pay attention to that number, you’ll find yourself over budget.
Get quotes from multiple dealers
Visit several dealers to collect quotations. Accept the lowest offer and contact other dealers to see if they are willing to exceed it. You can repeat this step and try to lower the purchase price further by bargaining.
If you don’t have time to do it yourself, you can consider contacting the dealer by e-mail for a written offer and negotiation. You can also outsource negotiations by paying for your car purchase service.