How To Buy a New Car for The Lowest Price


Have you’ve spent the past few months looking at a particular model to buy online, at the local dealership, or your everyday car is on its last leg? if answer is yes, now is one of the best times of year to buy a car


Meanwhile, buying a car at some point in time is a reality that we all have to face. I’ve compiled a list of several important car buying steps that you should follow. Heeding the advice in this article will help you save money, get the best deal, and hopefully, reduce the amount of stress involved with purchasing a vehicle.


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Important Tips for Buying a New Car

1. Do Your Research

The foremost and most important thing to know before you buy a car is that knowledge is power. It’s a mistake to arrive at a car lot without first researching the car you want to buy. You can find out just about anything you want to know about a car online. Edmunds.com, Consumer Reports, and Kelley Blue Book are great places to start researching cars in your price range.
Also, if you are considering buying a new car, your goal is to find the “invoice” price of the car, not the MSRP. The “invoice” price is what the dealer paid the manufacturer for the car. This research will come in handy once the price negotiations begin.
On the other hand, if you are thinking about buying a used car, research the recent resale prices for that specific car model. This data will give you major bargaining power. If you plan to trade in your current car, research market values for your vehicle, too. Knowing the value of your trade-in can also be a powerful bargaining tool.

2. Look into Pre-Financing Options

Many people obtain financing from the car dealership, but this isn’t fiscally responsible. Dealership interest rates are typically much higher than loan rates obtained from banks and credit unions. Your bank or credit union is one of the best places to start researching car loan rates, and you can obtain “relationship discounts” that you won’t find anywhere else.
LendingTree is a favorite for many car buyers because they take the hassle out of the process. When you use LendingTree you will receive five competing quotes at once.
Finally, once you obtain a quote from any financial institution, get the quote in writing. You can then present this quote to the dealership and use it as leverage to negotiate a lower interest rate.
Before you start looking for rates, it’s important to know your credit score. You can use Credit Karma to get your score for free. Credit scores play a huge role in the auto loan rates you’ll receive. The better your score, the cheaper your new car is going to cost.
Pro tip: If your credit score is lower than your like, you can sign up for Experian Boost. This is a free program that will help boost your credit score by factoring in your on-time utility payments. These typically have no impact on your credit scores.

3. Shop Around

Unless there is an emergency situation, shop around before you buy a car. I have an established rule in place whenever I shop for a car: I always make sure that I walk out of at least one dealership. This way, I always know their rock-bottom price, often given to me just before I leave. It might also make sense to explore out-of-town car dealerships. Dealerships price their vehicles differently depending upon their location.

4. Buy a Car You Can Afford

If you are considering buying another car before your current vehicle is paid off, you need to seriously reassess whether or not you can really afford to buy another car. You don’t want to be saddled with an upside down car loan.
A much better option is to wait until your current vehicle is paid off. Then set aside the money that used to pay for your monthly car payment in an interest-bearing account for one year, while continuing to drive your old car.
For example, if your previous car payment was $300 a month and you follow this strategy for just one year, you will then have more than $3,600 to use as a down payment on your next car. Just make sure that you’re not digging into your savings or your emergency fund to buy a top-of-the-line car. Buy within your means.
Pro Tip: If you’re not going to be driving your car every day, you can sign up for Turo. Turo is a car-sharing platform that allows you to earn extra money, helping you cover your monthly car payment, just by sharing it with other drivers. Sign up for Turo and see how much you could earn.



5. Narrow your choices to a few cars

Once you’ve set your budget and the type of ownership you’re looking for, start researching the cars that have caught your eye to see if they fit your criteria.
Visit automaker websites and independent automotive information sites to assess the features that are important to you, and note MSRPs (manufacturer’s suggested retail prices) and invoice prices. Check local inventory listings to see what is available in your area.
When you’ve narrowed your choices down to a few top options, don’t rush off to the dealership for a test drive just yet.

6. Assess your ownership costs

Using your short list of cars, estimate the ownership costs determine if each would fit into your budget. These should include gas, insurance, repairs and maintenance. An auto research website like Edmunds or Kelley Blue Book can provide a general overview of ownership costs for your area, but these numbers will vary depending on your personal situation.
For better accuracy, do your own calculation for fuel based on the number of miles you drive annually, and get an auto insurance quote on the cars you are considering that would apply to the drivers in your household. Make sure you give the insurance agent the exact model, including trim level, engine and sometimes certain add-on options, to get an accurate quote.

7. Secure financing — before you visit the dealer

Dealers don’t just want to sell you a car; they want to coordinate the car loan, too. That’s because they typically receive a flat fee or a commission on the auto loans they facilitate, regardless of whether the loan is from the manufacturer or a local lender.
With interest rates increasing, many dealerships are offering low promotional interest rates to top-tier customers. If you qualify, these can be great ways to save, but you should still get a preapproved loan offer before heading to the dealership. Going in with a preapproved offer is “always a good idea,” Montoya says, “just to see what you can get approved for and know what you can afford and also to be able to compare the interest rates.”
You can find current interest rates on Bankrate. Also check with local lenders, including credit unions, which tend to offer rates that are 1 to 2 percentage points lower, on average, than conventional banks. Many community credit unions are open to anyone living in their area, eliminating the need to work at a certain company or in a specific industry to join. Use CUlookup.com to find a credit union you can join.

8. Don’t assume financing at the dealership is the best deal

While you may be drawn to a certain car or brand because you saw an ad for a low interest rate, it’s of no use unless you qualify. Those super-low advertised rates are especially enticing as interest rates continue to rise.
Only a small percentage of car buyers qualify for the low interest or zero percent rate deals automakers offer, though. Even if you do qualify, you may be better off taking an automaker’s cash rebate and getting financing on your own at a bank or credit union.
To find the best deal for you, first identify the best interest rate you can get and then compare using Bankrate’s car rebate vs. low-interest calculator.

9. Get all the pricing information

The research you did on independent automotive websites should have included the invoice price (for new cars) or wholesale price (for used cars), as well as the manufacturer’s suggested retail price (for new) or the dealer’s asking price (for used).
While invoice pricing on third-party sites isn’t 100 percent accurate, it’s a good indicator of what the dealer paid for the car, and it’s the best place to start your negotiation. Aim to reach an agreement on the sale price that is close to that number before any discounts are applied, and keep in mind that the dealer needs to make at least a few hundred dollars’ profit to cover the operating costs of running the dealership.
You’ll also want to ask the dealer for a detailed price quote. “Whenever you ask for a price quote for a vehicle, you want to ask for a breakdown of all the fees so that you can see exactly what’s on there,” Montoya says. “And if something is unfamiliar to you, feel free to ask about it. The typical stuff you’re going to pay for is sales tax, registration fees and a documentation fee which is what the dealership charges to process the paperwork.”

10. Research all possible discounts in advance

If the dealership is promoting any cash-back deals, these incentives should again be deducted after you negotiate the price. Remember, many automakers offer discounts to students, military members and even members of certain credit unions. These discounts can be stacked and combined with the cash-back rebates on the model. Check automakers’ websites for these incentives.
Look to the calendar for additional savings. When dealerships have their big sales events, typically around spring, fall and the end of the year, you’ll see an influx of leased cars returned. These are great times to buy used and certified pre-owned cars, as dealers are taking in newer trade-in vehicles and putting lease closeout models back on the lot.
Outgoing models will drop to their lowest prices at the end of the year, when dealerships are looking to both clear out lots for new inventories and meet year-end sales goals.

11. Take your time with the test drive

Call the dealerships you’re interested in and make appointments for test drives. By reaching out, you’re establishing a relationship with someone who might be less likely to try to strong-arm you into a deal if you decide you are ready to buy after the test drive.
When you go in for the test drive, “you want to make sure you’re driving the exact vehicle that you want,” Montoya says. “Do your own research; don’t always rely on the salesperson. Models change so much over the years that they may not know everything about the car, so you want to do you own research ahead of time and just use the salesperson to fill in any gaps in the information that you need.”
Because most car shoppers these days keep their cars for five years or more, take your time with the test drive to make sure you really love the car. Don’t hesitate to ask for more time behind the wheel to ensure you like the driving experience, and spend time in the car while it’s parked to adjust the seats, experiment with the controls and determine whether passengers would be comfortable and your regular cargo would fit well.

12. Use smart negotiating strategies

When you are ready to make a purchase, forget about trading in your old car for the moment. You’ll fare better if you negotiate the sale price of your new car and the trade-in value of your old car separately. Make sure you have already researched your current car’s value online so you’ll know whether you are being offered a fair price when the trade-in is discussed.
Once it’s time to sit down and talk pricing, come prepared with the research you’ve done. “I like to negotiate with facts,” Montoya says. See if other dealerships are offering better deals on your vehicle and seek a price match from your salesperson. You should also be prepared to say “no” to extras. Research the add-ons you’re interested in beforehand and contact the dealership at a later date to negotiate fair prices for those items.

Before you sign the final contract, go over all of the details carefully. Make sure that you aren’t paying any unnecessary fees and double check that everything you negotiated verbally is also spelled out in writing.

13. Negotiate Terms

To me, buying a car is either a chess match, or it’s a war. Next to buying a house, purchasing a new car is one of the most important investments you will make in life. In fact, you may be paying off this car for the next four, five, or six years.
Let the salespeople know up front that you’re not going to be taken for a ride. Do everything you can do to negotiate the car loan and knock the purchase price down. Start with a ridiculous number, and work backwards. If the salesperson gives you an offer that includes a monthly payment of a certain amount based on a 60-month loan, tell them you want the same payment with a 48-month loan.
Walk into the dealership with confidence, stick to your guns, and don’t feel bad about walking away from any offers.  It might also be helpful to practice your negotiation strategies and tactics to prepare.

14. Look at Both New and Used Cars

In the past, buying a gently used car was the best way to save money when purchasing a vehicle. A big reason behind this logic is that new cars depreciate considerably the moment they are taken home from the dealership.
Unfortunately, the supply of used cars has decreased dramatically after many were removed as part of the “Cash for Clunkers” program. In addition, more people are holding onto their cars for longer periods of time before looking for a replacement. As a result, prices for used cars have increased significantly, making new cars a more realistic option.
Ultimately, make sure to go into the buying process with an open mind, considering both new and used cars and running the numbers before making your final decision.

15. Buy Based on Purchase Price, Not on Monthly Payments

Car dealers are notorious for offering a very attractive monthly payment to potential buyers. Do not be misled. If this “wonderful” payment is attached to a 72-month loan, then it’s really not that attractive at all.
Be sure to always negotiate based on the purchase price of the car, and not the monthly payment. Also make sure that you know the “full” purchase price of any car that you buy. There could be many extra, hidden costs factored into the price including various taxes, car preparation and delivery fees, and dealership costs that you won’t know about unless you ask.

16. Utilize the Internet

Purchasing a car online is definitely an option to consider. First, you completely avoid the hassle of dealing with annoying car salesmen. And second, you could end up with a much better price. Consider this: A salesman on the showroom floor is trying to negotiate the highest price possible, since his commissions are based on a percentage of the sale price. On the other hand, an Internet sales manager typically makes a fixed salary and gets paid a bonus, based on volume.
Additionally, purchasing a car online is more convenient than visiting multiple dealerships. After all, many large dealerships put up their cars for sale online. eBay Motors is a great place to look for a car, and you can also find cars for sale on Craigslist (just be careful of common Craigslist scams).
If you do decide to buy a car online, you’ll still want to test drive the car and have it checked by a mechanic to make sure there are no issues or problems.

17. Don’t Mention Your Trade-In

You should play your cards close to you in all aspects of the car-buying process, especially when it comes to mentioning your trade-in. Do not mention your trade-in until the end of the buying process. Why? The dealer will likely use this information against you.
For example, let’s say you’re looking at a $22,000 car and the dealer’s rock-bottom price for the car you’re considering is $18,000 (although he won’t share this information with you). If you have a trade-in worth $2,000, the dealer might offer to give you the car for $20,000 plus the additional $2,000 for the trade-in, for a total purchase price of $18,000.
If you hadn’t mentioned your trade-in, you could have negotiated the price down to $18,000 and then told the dealer about the trade-in, resulting in a final purchase price of $16,000. Negotiate these two aspects of the car-buying process separately. First, negotiate the best possible deal you can get for the car you want to buy, then go to work on getting the most for your trade-in.

18. Factor in Insurance Costs

Factor costs for car insurance premiums into the purchase price of your car. The cost of insuring a car is a major factor in the overall cost of the vehicle. Get insurance premium quotes online from Allstate or Liberty Mutual. You’ll provide information about the car’s make and model and personal information including age, marital status, and driving record.
Sports cars have higher premiums than conventional cars, but some cars have higher insurance rates for other reasons as well. For example, the Honda Accord, Honda Civic, and the Toyota Camry are favorites among car thieves because of their higher resale values, and the insurance premiums for these cars can thus be more expensive

19. Never forget Adding a Gap Insurance

What is Gap Insurance?

In the event your car is stolen or written off (total loss), GAP insurance covers the difference between the current value of the car (the amount your car insurer will usually pay out) and the amount you paid for the car in the first place, or any outstanding payments... this type of insurance is so important when you are considering buying a car.

20. Avoid Impulse Buying

Prevent impulse buying by conducting extensive research before you buy a vehicle. Buying a car on a whim is a risky endeavor. You might realize after it’s too late that you can’t afford the car, or you may find that the performance of the car just doesn’t meet your expectations.
By researching the make, model, and style of the car, and reviewing insurance rates and financing, you should be able to put yourself in a car that you will enjoy for many years to come.

21. Don’t Purchase the Add-ons

Buying a new car is a major purchase, and you may be paying it off over the next several years. If you finance the car, the overall costs for accessories will skyrocket, so keep the add-ons to a minimum. You don’t really need heated seats, and you can buy a portable GPS navigation unit online for much less than expensive built-in systems.
Rust-proofing is another add-on you don’t need despite what the salesperson might tell you. VIN etching, a rear camera, and a dealership maintenance plan are more add-ons that you don’t really need.

22. Always Test Drive the Car

90% of people who buy a new car test drive it first. Do not be among the other 10%. You want to test drive the car for many reasons, but comfort should be foremost in your mind. There are some cars that you just won’t feel comfortable driving. If this is the case, move on.
If you have children, bring them along on the test drive. Their comfort level is important too, and trust me, they will give you their honest assessment of the car. In addition to comfort, look for the following:
  • Idle: The car should be smooth and quiet.
  • View: Make sure the view from each of the mirrors is acceptable, and you have a straight line view of all dashboard gauges.
  • Controls: Flip on the air, locate the turn signals, and turn on the windshield wipers. Ensure that everything is easy to use. Some people find that their fingers are too big to handle certain switches, buttons, or levers in some cars.
  • Handling and Brakes: Make sure the car responds when you push the accelerator or brakes. Cars vary significantly in terms of sensitivity, and you want to choose a car that best fits your preferences.

23. Visit the Mechanic When Buying Used

If you’re planning to buy a used vehicle, it’s important to have the car thoroughly checked out by a mechanic before you finalize the purchase. The mechanic will inspect the car and look for unusual signs of wear and tear as well as items of potential concern.
Mechanical problems or maintenance issues that the mechanic finds may determine whether or not you buy the car, and the mechanic’s report may provide you with the necessary leverage to negotiate a lower purchase price.

Final Word

In the end, buying a car is a major purchase, and it’s important to research each and every aspect of the process. Educate yourself so you can go into negotiations well-prepared to get the best deal possible on a new or used car. By following the tips outlined in this article, you’ll get the best price possible on your next car.

Do you have any other tips for buying a car? What was the process like for your last purchase?

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