Whether a person has the dickering skill of a camel trader or prefers to buy everything online, no human contact necessary, buying a vehicle represents a right of passage nearly every American faces at some point. And few purchases have as long of an impact on overall household finances than paying too much for the wrong car.
Like any skill, anyone can acquire the ability and knowledge requisite to make a wise car-buying decision. Taking the time to study up pays huge dividends when it comes to saving on interest and maintenance costs. Here’s how to negotiate.
1. Research Like Mad
The magic of the internet has made many a car salesperson work harder for their paycheck. Failing to go online to do research could potentially mean getting snookered out of thousands.
Check out the Kelley Blue Book value of any potential new ride. Likewise, compare multiple advertised prices from several dealers in the area. Finally, scope out ads placed by private sellers to have a good idea of a fair deal before even planning the first trip out to a lot.
2. Keep in Mind That Timing Is (Almost) Everything
If at all possible, wait to make a purchase until the end of the month — or better yet, the end of the calendar year. Because car salespeople work on commission, they’ll agree to easier terms at the end of the month to close the sale in time for it to hit their check. At calendar year-end, dealers grow anxious to move old stock in order to make way for next years’ models, which can result in substantial savings, even on new vehicles.
3. Secure Your Own G’s
Most dealerships offer financing, but agreeing to their terms can mean paying hundreds if not thousands more over the life of the loan. In general, obtaining your own financing results in more favorable interest rates. Many banks and credit unions offer preferred terms to established customers, so begin there. Also bear in mind that larger down payments can make up for less-than-perfect credit when it comes to lowering interest rates.
4. Play Your Cards Close
Rolling into the lot in an already-owned ride? Don’t spill the beans about the trade-in until the deal has already been struck. When dealers know a trade-in exists, they sometimes attempt to use it as leverage to trick the unwary into thinking they’re getting a far better bargain than they truly are.
Likewise, those who can afford to pay cash would do well to keep that fact to themselves for as long as possible. Doing so forces the auto dealer to play their cards first, which gives the other party (you!) an idea of what they’ll potentially settle for. In any negotiation, knowing what the other has to offer first lends a considerable advantage.
5. Remember That Your Boots Were Made for Walking
Dealers love to work with people so desperate for wheels they’ll agree to nearly any terms. Walking away from a less-than-favorable transaction shows solid financial savvy. Yes, public transportation can be noisy, smelly and inconvenient, but those who live in urban areas do better to rely on it temporarily rather than getting stuck in a payment plan that leaves them struggling financially.
Vehicle payments should make up no more than 10 percent of the household budget — payments larger than that leave people at risk of economic hardship and can even lead to repossession and the associated credit rating ding.
6. Think Beyond the Showroom
Yes, that coupe looks tasty AF decked out with a moon roof and spoiler. But paying dealer prices for such add-ons makes as much sense as paying diamond prices for a cubic zirconia. Selecting luxy features at signing seems like a deal only because such amenities get rolled into the purchase price. Waiting and buying accessories after market generally means saving considerable dough.
Enjoy Your New Ride
Now that you’ve found the perfect vehicle, you’re all set to drive off into the sunset in your shiny new wheels. And you’ll sleep more soundly at night knowing you didn’t get ripped off in the bargain!
Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.