Unless you do it all the time – and very few people do – buying a new car can be an incredibly stressful experience. It should be exciting, and it usually is, but that stress thing is always in the mix. Most of the stress is related to deep-seated fears that you won’t get the best deal possible. And that’s not an irrational fear either. When you’re working with a car dealership, they are trying to arrange the best deal – for them! That means a not so good deal for you.
How can you turn the tide, and get a better deal on a new car?
1. Do your homework!
Whenever you are about to buy new car there is no choice but to become an educated consumer. Fortunately with the Internet, there are more ways that you can do that than ever. At a minimum, you can learn what the actual prices are for new cars in your area. This is important because the information will keep you from overpaying for the car you want to buy.
There are various websites that you can go to that will give you very specific information on the value of the car that you are looking to buy, right down to the options that you want include in the package. Kelly Blue Book is one such source, and Edmunds.com is another.
Best of all, you can be a complete novice when it comes to cars in using either of these sites. You simply have to enter the information about the car you’re looking to buy, and the sites will give you the price in your area.
Once you have the information, be sure to print it and keep a copy to bring with you to any car dealership you go into. Having knowledge of the car’s true value will be an important negotiating tool that you can rely upon in the event that the dealer becomes unreasonable
2. Sell your old car yourself rather than trading it in
If you are planning to trade in your old car when you purchase a new car, you’ll be giving complete control of the process to the car dealership. You will not only be relying on them to give you the best deal on your new car, but you will also be counting on them to give you a fair trade in on your old one.
If you can sell your car yourself – before going into the dealership – you will increase your bargaining position. Not only will you remove the opportunity for the dealer to play games with the trade-in value, but you will have a cash down payment that is certain and not in any way dependent upon the car dealership.
The car dealership will respect that position – you can count on it.
3. Line up your financing in advance
This is another benefit that a car dealer is only too happy to provide. And again, it gives them even more control. You should also be aware that car dealerships make money on the financing packages they provide.
You will do yourself a big favor if you line up your financing through your own bank in advance. By doing that, you can force the car dealership to make you a better financing offer. And if it isn’t a better deal than what your bank is offering, you can simply use your bank loan to complete the transaction.
This is important on another front as well. An unscrupulous dealer may attempt to move you into a sub-prime car loan – even if you’re not a sub-prime borrower – because such a loan is more profitable to the car dealership. This is the kind of outcome that can happen when you’re totally dependent upon the dealer. It is also an outcome which is fully within your power to prevent.
4. Bring a strong negotiator with you
The purchase of a new car is all about negotiations. You’ll negotiate to get the best deal – and the car salesman will negotiate to create most profitable sale. This puts you both at opposite ends of the spectrum. It is however an unavoidable arrangement.
If you are not a natural negotiator, this can add tremendous stress to the car buying process. There is a way that you can minimize that stress.
If you don’t feel confident in your negotiating skills, bring along a friend or family member who is particularly strong in face-to-face negotiations. It will be an even bigger benefit if that person also has a solid knowledge of cars and the car buying process.
It’s important to remember that the car salesman will have other people to fall back on during the negotiations, including the store manager and the finance manager. If you going to the dealership alone, you will have no one to turn to if things get sticky. Your negotiation partner can fill that role, and make it a lot easier for you to be tough when you need to be.
5. Don’t be afraid to walk
This is your ultimate weapon in the car buying process. If you don’t like the deal that is presented to you, you can simply get up and walk out of the store. Never underestimate the power of this action.
As much as you may want to buy a particular car, recognize that a car salesman lives on commissions, and that he has a vested interest in making the deal. If you walk out, there’s no deal, and the salesman will have no commission. That’s the last thing that he – or his sales manager – wants.
Being willing to walk out will force the car dealership to give you its best deal. If they refuse, you can continue walking – over to the next dealership.
You can replace the sense of powerlessness in the car buying process with concrete action steps that will put you in control. And once you do, you’re far more likely to get the best deal on a new car.
Have you ever used any of these strategies when buying a new car?
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.