For the most part, everyone is going to buy a car at some point in their lives, and usually, this will end up being the second most expensive purchase that they make (after a house). For this reason, it’s incredibly important to make sure that you’re savvy when buying your car. Paying attention to the details of your purchase can end up saving you thousands of dollars over the years.
To help, we’ve put together this guide. Enjoy!
One of the most important things to do when buying a car is to shop around. You want to get a few different offers from a few different dealers. This is important for a few reasons:
- You’ll make sure that you’re paying at least market value for the car – By getting multiple offers for the same car (both online and in-person), you’ll ensure that you’re getting the best price possible. You can check Kelly Blue Book’s website to find the fair market value of your trade-in and the car you’re looking for.
- You never know where you might find a deal – Different dealers offer different deals. If you only go to one dealer, then you could be missing out on a deal from another.
- You can leverage different offers against each other – By collecting a few offers, you can subtly mention to one dealer that their competitor across the street gave you a slightly better offer and see how they react.
While you’re shopping around, it’s important to not be rushed for your decision. That brings us to our next tip.
Take Your Time and Select the Right Time to Buy
Ideally, you never want to be in a rush to make a big purchase. You can be in control of the situation by taking all the time you need to make an informed decision. If anything, this will give you more bargaining power because salespeople will offer you incentives to make a purchase earlier.
Timing matters – The best times to buy cars tend to be towards the end of the year, towards the end of the month, and early in the week. This is because salespeople have quotas that are typically counted in monthly, quarterly, or yearly sales. The car you buy may make or break the salesperson’s quota and financially incentivized goals. If you go to the dealership earlier in the week when it is less busy, you may receive more attention from the salesperson than you would on a busy weekend. Timing can save you money and give you a better shopping experience.
Negotiate Your Financing
When it comes to your financing, we’d typically recommend putting down at least 20% and not exceeding 36 months for your payments. Your main focus should be on getting the lowest overall price, not just a low monthly payment. In fact, a common trick used by salespeople is to try to get the customer to focus only on the monthly payment (instead of the actual price).
They will make it seem like you’re getting a good deal because the monthly payment is so affordable. However, they could be drastically overcharging for the total price of the car. You end up paying more for the car than you should due to a longer loan period. Cars are depreciating assets; with a long loan period and quick depreciation, you can easily go under water with your new car purchase.
Let’s look at a few other tricks salespeople might try and use.
Some Common Sales Tricks to Avoid
- “You can only get this deal if you sign today” – This is meant to incentivize you to buy right now instead of coming back another day. They will offer some reason why the deal you’re getting is only available today and if you leave it’s off the table. This is usually not true.
- The option close – The salesperson may try to subtly shift the conversation from “are you buying a car?” to “which car are you going to buy?” This is done casually but can be powerful in switching the customer’s mentality into thinking that now they need to choose a car today.
- Waiting until the very end to add “tips and fees” – Some salespeople will wait until the very final minute to bring up certain tips and fees included in your purchase even if there has been no mention up until now. Assuming that you’ve already done a fair amount of negotiating up to this point, they will hope that you’re simply too tired to argue it.
We hope that you’ve found this article valuable when it comes to understanding a few things to look for and avoid when buying a car. Feel free to reach out to us with any questions you may have. Stay safe!
For over three decades, Financial Services Advisory has helped clients manage their money through good times and bad. We customize an individualized approach for every client looking to invest while focusing on protecting what you have worked so hard to create. When working with FSA, you will find our goal in managing investments to help you protect your wealth while growing it wisely.