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You've probably seen those zero-percent and low-percent interest rate deals offered by the automakers. But don't assume you will automatically qualify for one of them as only around 10% of automobile buyers do. So, if you are attracted to a certain brand or vehicle because of an ad offering a very low interest rate, you may be shocked when you see what you're offered at the dealership. It might be better to take a cash rebate if it's offered and then get your financing someplace else. You should research interest rates before you visit a dealership. You can get interest rates from local lenders such as a credit union, whose loans are usually 1% to 2% lower on the average than what you could get from a conventional bank. You don't even have to belong to a certain organization or work for a specific company in order to join a credit union anymore. There are many credit unions now open to anyone that lives in their areas. Go to CULookup.com to see if there is one where you live that you could join.
6. Never assume that your best option is dealership financing
The fact is that dealers don't just want to sell you a car. They want to sell you a loan as well. This is because they typically get a fee or a commission on any car loans that they can sell, whether it’s from a manufacturer or local lender. Be careful, too, if the offer seems to be too good given your credit score. There are dealers who will tell you they can get you this really great rate in order to get you to sign up. However, they may gloss over that section of the contract that says your loan rate will be contingent on having the loan approved.
7. Know the invoice price
When you do your research, be sure to look up the wholesale prices for used cars and the invoice prices for new cars. You should also know the dealer's asking price for used cars and the suggested retail prices for new cars. It's not 100% accurate to get invoice pricing on sites like Edmunds.com but they can be good indicators of what the dealer really paid for the car. And knowing this is great for negotiating. Try to agree on a selling price that is close to that number before the dealer applies any available discounts. Do understand that the dealer isn’t in business to break even. He needs to make at least several hundred dollars to cover the cost of running the dealership.
8. Check out all discounts
It's likely that you've seen the automaker ads promoting "cash-back"deals. These incentives should be included in your price. Plus, many of the automakers offer discounts based on the type of the person buying the car such as members of the armed services, students, previous buyers and even people who are members of certain credit unions. You should be able to combine these discounts in addition to any cash-back rebates on the car you're buying. Manufacturers sometimes give dealers $1000 or even more as an incentive to sell certain models when they have too large an inventory. Go to sources such as Edmunds.com or KBB.com to see the incentives that dealers are being offered on the model you are thinking of buying. Then ask the dealer to share that incentive with you by lowering the price even further.
9. Be a smart negotiator
After you’ve completed your research and are ready to begin visiting showrooms, call and make an appointment with the Internet or fleet manager for a test drive. If you do this then when you’re ready to buy you won't have to put up with someone who is likely to try to pressure you into a deal. When you begin negotiating the price, remember all the discounts you researched but forget about the car you’re trading in -- at least for the moment. This is because it's usually easier to get the best price if you first negotiate the selling price of the new car and then the trade-in value of your old car. As part of your research, you should have checked up on your car’s value in advance so that you will know whether you’re being offered a realistic price. When you reach an agreement, be prepared to say “no” to almost all the extras you will be offered. Do the research at home for whatever extras or options that interest you and then contact the dealer a few days later to discuss a fair price for those items.
If you’d like more tips on negotiating the selling price of a new car, watch this video.
10. Don’t rush your test drive
If you want to get the most out of your investment, you’ll want to drive that car for five years or longer. Take a very thorough test drive so that you know you’ll be happy in the long run. Park the car and take some extra time to adjust the seat and work the controls and use any of the car’s other features. Check to be sure all of your typical passengers and cargo will fit comfortably. As a final check, think about what your life will be like five years from now and then try to imagine whether or not that car will still suit your needs.