fbpx
U

4 Steps to Coming Out Ahead When Buying a Car

October 24, 2014

Buying a Car

Unless you live in a city with great public transportation, a vehicle is necessary in order to get around. However, that doesn’t mean you have to buy a brand new car – or pay top dollar for one. Cars don’t make the best investments because they start to lose value the moment you drive it off the lot.

Be smart about this purchase, and be ready to negotiate to get the best price.

Negotiating with dealerships isn’t what most people would call fun, but it’s a necessary part to coming out ahead. If you do your research beforehand, you’ll come in prepared and more likely to pay less than the advertised cost. By collecting data on prices in your area, you’ll be able to set yourself up for a great round of negotiating.

How do you go about collecting that data, though? Start with the tools and advice shared via the Money Guy, of course! Use these 4 steps to become more knowledgeable and increase your chances of a successful negotiation at the car dealership:

Step One: Decide On a Car

This is arguably the most difficult step in the process. There are a lot of options (and a lot of temptation to buy something you don’t really need).

First, make a list of what you need in your car. These are your priorities. You can make a list of wants, too — but think of these as bonuses, not must-haves.

If you’re at a loss as to what makes and models are the best choices, do some research by using Consumer Reports and Edmunds. Both of these sites are great resources and will give you unbiased reviews.

Once you’ve narrowed the list down to 2 to 3 cars, visit a local dealership and take those cars on a test drive. Settle on the one that impresses you the most, but leave after that. It’s important not to fall in love and want to drive the car off the lot right then and there.

You still have research to do.

Step Two: Shop Around

Now that you know what car you want, take a look at your chosen manufacturer’s website to find out what kind of inventory the dealerships around you have. This is usually found under the heading “shopping tools” on the website.

You’ll be required to enter your zipcode to view the inventory. While you can enter your zipcode in at first, you should expand your search to dealerships within a 30 to 60 mile radius — they might have better prices.

Hopefully, a few of these dealerships will have the exact car you want. It’s okay if their prices aren’t listed; you’re just trying to find out who to contact when you know the price you want to pay.

Step Three: Determine the Price

Now that you have a good idea of what’s out there locally, it’s time to do the heavy lifting regarding pricing. To find out what the going price is on the car you’ve selected, go to CarsDirect.

This website is basically a one-stop-shop for cars. They offer “insider tips” that will help you with your research. Look at the “Prices & Deals” tab on the make and model of your choice, as well as the “Reviews.” They also have a “Compare” option that might be useful if you’re still back and forth with which model to choose.

After this, go to the forums on Edmunds. Why? It’s a great place to stop and listen in on what other people are saying about the car you’re interested in. (A little market research never hurts.) Choose the make and model of the car you have in mind, and browse the forums.

You should see topics like, “[Make and model] Prices Paid and Buying Experience.” This is great information that you can use when it comes time to buy.

The goal here is to become more knowledgeable on the car you’re looking to buy than the salesman. You want to have the upper hand so that negotiating is a breeze.

Step Four: Contact the Dealership

If you don’t like negotiating, this may be a tough step. But if you’ve done your research (and you have, if you’ve followed this guide), then you’re prepared and capable of working out a deal.

Use the fact that you’re ready to buy to your advantage. When you call, let the person on the other line know that:

  1.  They have the car you want on their lot.
  2. Two to three other dealerships in the area also have the same car…
  3. …so you’re showing up to the dealership that can offer you the best, rock bottom price, with a check in hand.

You want to communicate your expectations and let them know you’re serious.

Why call over visiting in person? You have more leverage over the phone than you do face-to-face, and there’s less temptation to “give in” to the salesman over the phone. It’s harder to physically walk away than it is to end a phone conversation.

Stick to your guns. If the price quoted is too high, let the sales manager know what you’ve found in the course of your research. If all goes well, you’ll soon head down to the dealership to pick up your new car for the price you wanted to pay.

Tools for Buying Used

Edmunds is a great place to look as far as research and reviews go. You can check out Autotrader for listings in your area, and Kelley Blue Book (KBB) for information on pricing. (KBB is especially great if you’re also looking to sell your car.)

There’s nothing to buying a new (to you) car so long as you do the research ahead of time and know what you want. Don’t be enticed by any of the offers that come your way before you are ready. Remember that cars depreciate in value, and there’s no reason to pay more than necessary for one.

FILED UNDER: Blogs
TAGGED WITH:

Most Recent Episodes

How to Be Wealthy By Age! (Can You Catch Up?)

How much does it take for you to meet your retirement goals by age, and what are some common traps your peers fall into? Learn more about how to be wealthy, mistakes to avoid, and exactly what a little extra saving can do for your retirement income. In this episode,...

Can Money Buy Happiness? (Here’s the Truth)

Money and happiness aren’t directly correlated, but they are intertwined. Some believe that once they have a large, pie-in-the-sky amount of money, they will finally be happy. Others are working towards a more specific retirement number they hope will bring happiness....

Passive Income EXPOSED: 3 Ways to Actually Make Money (2022 Edition)

Passive income is a dream for many looking to get out of their 9-5 or just create extra income on the side. In this episode, we’ll break down different ways to actually earn passive income in 2022. In this episode, you'll learn: The easiest and hardest side hustles...

Millionaires Share Their Secrets to Financial Success! (2022 Edition)

It’s that time of year again: our annual Money Guy Wealth Survey episode. We’re back with all-new data for 2022, including new questions. You’ll learn who millionaires are, what they did to get there, and how they built their wealth. In this episode, you'll learn: The...

Dumb Financial Decisions That Americans Make! (Do You?)

Throughout our years of doing the show, we’ve seen more than our share of financial mistakes. Some are more common than others - in this episode, we’ll discuss some of the dumb financial decisions Americans make - and what you can do differently. In this episode,...

3 Things You SHOULD Spend Money On (Even During a Recession)

When is it okay to start spending money on things you want, but may not need? In this episode, we'll discuss when you can start spending money on "unnecessary" purchases, and what goods, services, and experiences are worth spending money on. In this episode, you'll...

3 WORST Types of Financial Crooks (Don’t Get Scammed!)

In the financial world, there are a lot of crooks that try to get into your pockets. From metaphorical crooks selling a bad product to literal crooks stealing your money, we'll cover the different types of financial crooks to watch out for and how you can protect...

Financial Advisors React to NFL Players Spending Their First Million!

Not many Americans will ever make over one million dollars in a year, but professional athletes regularly make that and more. In this react video, we'll see how NFL players spent their first million dollars after making it into the league. As we review their mistakes...

Everything You Need to Know About Real Estate Investing!

Over the years, we have had some great conversations about real estate investing. In this episode, we put together the ultimate guide to show you everything you need to know about real estate investing! In this episode, you'll learn: How to get started in real estate...